Neighborhoods and Housing Markets Regional Discussion

January 23, 2012

Robin NewbergerCommunity Development and Policy Studies Department

Federal Reserve Bank of Chicago

Housing Market IssuesIssues/Challenges Potential Solutions

High rates of foreclosure◦ Rising starts and falling

transitions Falling home values Negative equity/drop in

home financing◦ Affordability

Rising REO and vacancy rates

High unemployment

Loan modificationsTemporary financial

support to homeownersExpansion of affordable

rentals◦ Including from REO inventory

Land Banks

Improvement of labor market

High Rates of ForeclosureIllinois Foreclosures County Foreclosure

Inventory

1992q1199

3q2199

4q3199

5q4199

7q1199

8q2199

9q3200

0q4200

2q1200

3q2200

4q3200

5q4200

7q1200

8q2200

9q3201

0q40

2

4

6

8

10

12

Seriously Delinquent (IL %)Past Due 90 Days (IL %)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

4.33

0.87

1.98

7.42

McHenry Dupage KaneDekalb Will GrundyKendall Cook LakeSource: MBA and LPS

Estimated Foreclosure Start and Transition Rates

2006m

6

2006m

12

2007m

6

2007m

12

2008m

6

2008m

12

2009m

6

2009m

12

2010m

6

2010m

12

2011m

60.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

Cook Transition Cook Start

2006m

6

2006m

12

2007m

6

2007m

12

2008m

6

2008m

12

2009m

6

2009m

12

2010m

6

2010m

12

2011m

60.00

5.00

10.00

15.00

20.00

25.00

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

Dupage Transition Dupage Start

Foreclosure Inventory Rates2006 2011

Falling Home Values

0

50

100

150

200

250Chicago MSA Housing Price Index

(1995 = 100)

Source: OFHEO

Little Village -60.7 Cicero -61.4 Mount Prospect -33.5

Cragin -54.9 Waukegan -45.7 Joliet -31.3

Woodlawn -50.4 Des Plaines -43.4 Bolingbrook -31.3

West Rogers Park -50.2

Country Club Hills -42.9 St Charles -27.5

Humboldt Park -46.3 Crete -38.5 Lake forest -27.3

Englewood -46.0 Schaumburg -37.9 Wheaton -21.8

Garfield Ridge -40.3 Woodstock -37.6 Naperville -18.1

Logan Square -34.1 Aurora -35.9

Bridgeport -29.9 Fox Lake -35.8

Lincoln Park -6.6 Algonquin -35.1

Negative Equity

2009q1 2009q2 2009q3 2009q4 2010q1 2010q2 2010q3 2010q4 2011q1 2011q2 2011q320

25

30

35

40

45

50

% Single Family Homes with Mortgages in Negative Equity (Chicago MSA)

Source: Zillow

Percent Change in Mortgage Lending (2006-2010)

Home Purchase Refinancing

Source: HMDA

Home Mortgage Lending

Limited Numbers of Modifications

Jan-10

Mar-10

May-10 Jul-

10Sep

-10Nov-

10Jan

-11Mar-

11May

-11 Jul-11

Sep-11

Nov-11

0

10000

20000

30000

40000

50000

60000

HAMP Modifications Chicago CMSA

Permanent Modifications Active Trials

Real Estate Owned (REOs)(percent of all current and non-current loans)

2006m

6

2006m

12

2007m

6

2007m

12

2008m

6

2008m

12

2009m

6

2009m

12

2010m

6

2010m

12

2011m

60.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

DupageKaneDeKalbWillKendallLakeCook

Source: LPS

Neighborhood Vacancy Rates

Source: Census 2010

Unemployment and Foreclosures

Source: IDES LAUS

Regional and Local ComparisonRising foreclosure rates across all countiesFalling transition ratesFalling home valuesLimited number of modificationsSome communities more economically frail

than othersExtent of “underwater” varies with drop in

valuesHome financing more available in some placesImpact of unemployment on housing market

Housing Market IssuesIssues/Challenges Potential Solutions

High rates of foreclosure◦ Rising starts and falling

transitionsFalling home valuesNegative equity/drop in

home financingRising REO and vacancy

rates

High unemployment

Loan modificationsTemporary financial

support to homeownersExpansion of affordable

rentals◦ Including from REO inventory

Land Banks

Improvement of labor market

Thank you