CHICAGO HOMEOWNERS - Purchase Your Home Recently, with Little Down? Most Likely, You're Upside Down!
OF 2006 HOME BUYERS, 37.8% NOW OWE MORE THAN THEIR HOUSE IS CURRENTLY WORTH - ZILLOW.COM STUDY!
We know that Real Estate is local, not national, in its scope and effect. However, recent numbers compiled by Real Estate Homesite Zillow.com should offer concern for Chicago and Chicago Area Homeowners - especially those who have purchased their homes within the last couple of years.
Based on its data, Zillow estimates that over one-third of those who puchased homes during 2006 and 2007 owe more on their home mortgages than the likely current market value of their home. Nearly 38% of those who purchased their home in 2006 have "negative equity," while 31.1% of those purchasing last year, in 2007, are negative.
By contrast, only 3.1% of home buyers from 2003 - five years ago - have negative equity. These numbers, studied together, point up the radical shift in the Real Estate Market in Chicago in the past two tumultous years, as well as the negative impact of mortgage loans, rarely available today, which offered high-leverage financing with as little as zero down, or, in some cases, less than zero down.
The Zillow data, which is often based on computer models and may differ from data generated elsewhere, suggests the peak of the Chicago Area Real Estate Market occurred during the Second Quarter, 2006. Since that time, the company estimates, home values across the Chicago Market have fallen 8.8%. (This represents an eight-county area in Northeastern Illinois and Northwestern Indiana).
Year to year, between June, 2007 and June, 2008, the median home value fell 7.3% across the Chicago Metro Area - to a $244,353 median for single family homes and condos.
According to Amy Bohutinsky of Zillow, Chicago is experiencing a similar rate of equity decline as other market areas across the U.S. - although it is not, by far, the worst metro area. "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 also tracks the percentage of homes which have sold at a loss versus the current owner's original purchase price. During the Second Quarter, 2008, 19.8% of homes in the Chicago Area sold for a loss, compared to 13.4% a year ago. Of houses sold during the last five years, only 4% sold for a loss, according to Zillow data.
Read more in today's Chicago Sun-Times front-page story, by David Roeder and Francine Knowles. A related link maps declines in home equity by Chicago Neighborhood or Suburb.
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