Wrong side of record: Foreclosures on pace to shatter ’07 total

By Alex Gary

BusinessRockford.com

The number of families losing their homes to foreclosures set a local record in 2007.

But judging from the halfway point of this year, 2008 will be even worse.

Through June, 631 foreclosure notices had been filed in Boone, Ogle and Winnebago counties.

That’s a decided increase over 2007’s count, which recorded 938 for the year.

All three counties are on pace to set records, although Boone County homeowners are bearing the brunt. According to the Boone County Circuit Clerk’s Office, 257 foreclosures were filed in the first six months of the year, compared with 394 in all of 2007. And this in a county with just 15,414 housing units in the 2000 census.

Debbie Carlson of Coldwell Banker Premier’s Belvidere office said Boone County’s rapid growth in the past 10 years indirectly led to the foreclosure crisis in the county.

“There’s a big difference between the Boone County market and the Winnebago County market,” Carlson said. “We’ve had a lot of commuters move here because of (Interstate 90), and the prices have really increased. There was a lot of creative financing to get into some of those homes.”

Winnebago County, which had more than 114,000 housing units in 2000, had 302 foreclosures in the first six months. The highest yearly total in Winnebago County this decade was 501 in 2006.

The average sale price of Boone County homes involving a Realtor in 2007 was $208,465, compared with the $133,295 average price of Winnebago County houses and condominiums, according to the year-end statistics from the Rockford Area Association of Realtors.

High foreclosure rates hurt more than just the family losing the house and the mortgage holder forced to take the loss. Local governments have to spend more in trash removal, unpaid utilities, police and sheriff costs, and inspections. Foreclosed homes frequently can be targets for crime and looters, with things such as aluminum siding, windows and molding being stripped, or with people breaking in to rip out copper wiring.

Carlson said so far she hasn’t seen much, if any, of that in Boone County.

“What I have seen, and I’m really proud of some of our neighborhoods, (is that) neighbors are taking turns mowing the yards and keeping an eye out on the houses,” she said. “It’s not all gloom and doom. It’s just a sign of the times. We’re all feeling some kind of effect. A lot of people are having to cut back.”

For the homeowners who have their houses on the market — when sales are running 33 percent behind 2007’s pace — the rising number of foreclosures does present some challenges.

“What it does is add to the number of listings,” said Keith Kelly of Dickerson & Nieman Realtors Inc., who has been selling homes for 21 years. “We’re at 3,200 listings, and in better times that would be around 2,500. I’ve been telling people if they must put their house on the market then go ahead, but if they are just testing the waters, then this is not the right time.”

But Kelly hasn’t seen potential buyers trying to undercut listing prices by using a nearby foreclosure as a negotiating tactic.

“It’s really two different markets,” Kelly said. “A lot of these foreclosures have been sitting awhile and need a lot of work, while a house with an owner is going to be in much better condition. Investors are going after foreclosures. Most families want to buy something that is move-in ready.”

Reach Assistant Business Editor Alex Gary at agary@rrstar.com or at 815-987-1339.

Foreclosure breakdowns
Through July 10, according to Whitehead Inc. Realtors, more than 15 percent of the 2,012 houses and condominiums sold this year were foreclosed properties.

Of the 304 foreclosed properties sold:

38 percent sold for less than $60,000.

23 percent were between $60,000 and $99,999.

25 percent were from $100,000 to $159,900

13.5 percent (or 41 sales) sold for $160,000 or above.