This is the 5th article in a series I am writing about the real estate market on Chicago's North Shore. In these blog posts I talk about "shadow inventory." These are homes that are in pre-foreclosure (the owners are 3 months or more behind on their payments) or homes that have already gone through the foreclosure process and are bank-owned. Some of these homes may already be available for sale, but most of them are not. They are called "shadow inventory" because although they are not for sale at this point in time, and many of them will be for sale in the coming months at discounted prices (as short sales or bank-owned properties) because of their distressed status. When these types of properties are for sale, this causes prices decline. So the fact that these properties are potentially going to hit the market in the coming months is NOT A GOOD THING.
Highland Park
Shadow inventory in Highland Park increased to 121 properties from 113 during the past 6 months; 23 % of these are bank owned and 77% are in pre-foreclosure. This isn't a huge increase, but it still isn't a good sign for this market.
A total of 54 distressed properties were sold during the past 12 months – less than half were bank owned and the rest were short sales. The good news for Highland Park is that the number of distressed properties sold over the past 12 months as a percentage of the current shadow inventory is 44%, which is above the North Shore average of 38%.
|
Highland Park - 12 months ending 7.26.2011 |
Bank-owned Properties Sold |
Short Sales |
Total distressed property sales |
|
Total |
26 |
28 |
54 |
|
% single family homes |
100% |
89% |
94% |
|
% condos/townhomes |
0% |
11% |
6% |
Overall, I think that pricing recovery for Highland Park is going to be a little bit slower than for its neighboring communities to the North and South.
Kenilworth
This is a very small and exclusive area. The shadow inventory in Kenilworth increased by 28% since January. I know that sounds like a lot, but in reality it only “jumped” from 7 properties to 9. (This is why you have to be careful when you hear people quoting statistics – they can be very misleading!). There is one bank owned property and 8 pre-foreclosure properties. Yes, believe it or not, there are 8 households living in Kenilworth that have not been paying their mortgage!
During the past 12 months there were 3 distressed properties that sold in Kenilworth – 1 bank owned property and 2 short sales. The distressed sales are 33% of shadow inventory, which is below the North Shore average. But again, we are talking about very small numbers in a very small community.
|
Kenilworth - 12 months ending 7.26.2011 |
Bank-owned properties Sold |
Short Sales |
Total distressed property sales |
|
Total |
1 |
2 |
3 |
|
% single family homes |
100% |
100% |
100% |
Prices will probably stabilize in Kenilworth before anywhere else on the North Shore. However, just like the other communities, the presence of bank owned properties will continue to put some downward pressure on prices. With only one bank owned property right now, things aren’t too bad.
Lake Forest
Lake Forest had a dramatic decrease in shadow inventory since January. It went from 107 properties to 69. This is a very good sign for the real estate market in Lake Forest. Interestingly, only 26 distressed properties sold in the past 12 months in Lake Forest. Almost 70% of these were short sales.
|
Lake Forest - 12 months ending 7.26.2011 |
Bank-owned properties Sold |
Short Sales |
Total distressed property sales |
|
Total |
8 |
18 |
26 |
|
% single family homes |
87% |
94% |
92% |
|
% condos/townhomes |
13% |
6% |
8% |
The number of distressed sales relative to the shadow inventory is about 38%. This is equal to the North Shore average. I think that this benchmark is outweighed by the dramatic decline in overall shadow inventory during the past 6 months. This community may see prices stabilize in the near future if the number of distressed properties continues to decline at this rate.
If you are interested in seeing the complete report, just contact me and I will send you document that includes all the info for the North Shore in one article.
Next post will cover Northbrook and Northfield...
Thank you for reading!!
Nancy S. Karp
To find any property for sale in the Chicago area, click here.
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