continues to rise as more Chicago-area homeowners lose their properties
The local home vacancy rate hit 3.8% in the first quarter, up from
3.7% in the fourth quarter and 2.7% in the year-earlier period,
according to the U.S. Census Bureau. The rate is the highest since the
Census began tracking home vacancies in 1996.
It’s another troubling sign in a local residential market
struggling to get back on its feet amid a severe three-year slump. More
homes are sitting empty as lenders take them over through foreclosure
and try to resell them, especially in depressed South Side
neighborhoods with a lot of subprime lending activity.
“They’re not getting snatched up by investors,” says Michael van
Zalingen, director of homeownership services for Neighborhood Housing
Services of Chicago Inc., the city’s largest housing counseling agency.
Bank-owned properties “are just going to keep stacking up.”
The rising number of unsold vacant homes is a growing problem in
places like Englewood and North Lawndale, blemishing neighborhoods with
boarded-up windows and depressing property values.
Englewood has a 16.1% vacancy rate, the highest in the city, and
North Lawndale’s vacancy rate is 11.8%, according to Neighborhood
Housing Services data.
But the foreclosure problem, formerly limited just to places with
large numbers of subprime loans, is spreading beyond the city limits as
the recession drags on and more suburbanites fall behind on their
Foreclosure filings in the city actually fell 8.4% in the first
quarter from the fourth, but surged in five collar counties, including
Kane, which saw a 69.7% jump, according to the Woodstock Institute, a
Chicago-based housing advocacy group.
The problem is “going to move up the economic ladder,” Mr. van Zalingen says.
The large number of unsold condominiums in the city may also be a
factor behind the rising vacancy rate, as more people who bought condos
as an investment struggle to sell them amid a lousy market. The units
sit empty until a buyer — or a renter — moves in.
Nationally, the homeowner vacancy rate was 2.7% in the first
quarter, vs. 2.9% in both the fourth and first quarter of 2008,
according to the Census. Portland, Ore., had the highest vacancy rate
among the 75 largest U.S. metro areas, with 7.3%, while Honolulu and
Milwaukee, Wis., tied for the lowest, with 0.5%.
Foreclosures have jumped in recent years largely due to lenders’
lax loan standards earlier this decade, which allowed more people to
buy homes. After hovering in the mid-60%-range in the late 1990s, the
local homeownership rate — or proportion of households occupied by
owners — jumped as high as 71.2% in 2006, according the Census.
Though the rate has dropped slightly since then, hitting 69.1% in
the first quarter, it has yet to fall back to historic levels. Tracy
Cross, president of Schaumburg-based real estate consulting firm Tracy
Cross & Associates Inc. expects the rate to decline further.
“It’s going to come back down as fewer people qualify” for loans, he says.
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