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FALLING HOME PRICES | Collapse in housing market leaves many who bought in last 2 years owing more than property worth
Declines in Chicago area housing prices became steeper in the last 12 months, with many buyers carrying mortgages worth more than the homes they live in, according to research from the online real estate data company Zillow Inc.
The Zillow report places the top of the housing market in the region in the second quarter of 2006. It said that about a third of all homes sold in 2006 and 2007 in the Chicago area are now financially "under water," meaning their owners have negative equity in the property.
(Keith Hale/Sun-Times)
The result reflects a collapse in the national housing market in 2007 when lenders became concerned about rising defaults and tightened loan standards. It also shows the onetime popularity of loan deals that let people buy homes with little or no money down.
Overall, median Chicago area prices fell 7.3 percent in Zillow's comparison of second-quarter data from this year to last year. The marketwide median is $244,353, slightly higher for single-family properties and lower for condominiums.
The company said values here have fallen 8.8 percent since the 2006 peak. Its results cover an eight-county area that includes Northwest Indiana.
They are no surprise to Paul and Stephanie Moretta, who said they had to drop the price of their Rogers Park condo three times before finding a buyer. They bought the three-bedroom, two-bath home in 2003 for $339,000 and first put it on the market 15 months ago for $429,000.
They have a buyer at $365,000 and feel fortunate to be making a profit. "This is really the only way we were able to sell," said Stephanie Moretta, 31. The Morettas are expecting their second child and are buying a bigger home in Peterson Park in what amounts to a home trade with their condo buyer. Their Keller Williams agent realized another client was selling a home that fit the Morettas' needs and that seller wanted to buy a condo.
Paul Moretta, 40, said that in 2003 he sold a condo in less than two months. "This time it was a little bit scary," he said.
The accelerating rate of decline means the Chicago market is in line with other metropolitan areas, said Zillow's Amy Bohutinsky.
"One hundred forty of 165 markets reported declines. In none of those has the rate of decline slowed," she said. "That tells us there isn't a bottom in housing prices yet."
Zillow said 37.8 percent of Chicago-area buyers in 2006 now owe more on their mortgage than their homes are worth. For 2007 buyers, the percentage is 31.1, Zillow said. Conversely, it found that only 3.1 percent of 2003 buyers have negative equity.
The company tracks another distress signal, the percentage of homes sold "for a loss," which Zillow defines as selling for less than the property's prior sale, regardless of how long ago. In the second quarter, 19.8 percent of homes in the region sold for a loss, vs. 13.4 percent for the second quarter of 2007 and just 4 percent for all sales in the last five years.