Here is yet another troubling angle to the surge in foreclosures over the past year.
Across the country, and here in Chicago, banks, large and small, are finding themselves with nearly double the number of REO homes in their portfolio than just one year ago. (REO stands for "Real Estate Owned" by banks, after they foreclose on property).
In many of the weaker housing markets across the country, where lenders see gloomy prospects for price recovery near and mid-term, lenders are dumping these homes for whatever they can sell them for. This behavior has the potential for further depressing housing properties in local or micro-markets and neighborhoods.
The weakest markets are seeing banks not technically taking title to the property they could own. In these communities, with little outside interest in private purchase of these homes, they simply lie abandoned, in deteriorating condition.
Here in Chicago, lenders see price recovery coming, and a robust housing market on the horizon. Some here, including locally-operated Harris Bank, are accepting longer market times, for now, as well as the higher carrying charges associated with hanging on to the foreclosed homes. They avoid deep-discount selling, in some cases, to protect overall housing price points - although the side effect of boarded-up houses in many communities here is troubling.
This foreclosure after-effect is but another disturbing wrinkle in our Real Estate Market - 2008.
How are lenders handling their REOs in your market? Please let us know.
Also, please review our Dean's Team Blog Center post today @ BlogChicagoHomes.com, for more information, and a link to Real Estate Columnist Mary Umberger's Column in last Monday's Chicago Tribune.
DEAN & DEAN'S TEAM CHICAGO