Zillow: 38% of local single-family homes underwater

By Mary Ellen Podmolik
Posted Feb. 8 at 11:02 p.m.

Almost two of every five owners of single-family, detached homes in the Chicago area were underwater on their mortgage in December, an all-time high and far outpacing national trends, according to data to be released by Zillow.com Wednesday.

The realty Web site found that 38.6 percent of all single-family detached homes with a mortgage had negative equity, meaning homeowners owed more on the homes than the properties were worth in the fourth quarter, compared with 32.9 percent in the third and 28.3 percent a year earlier. Nationally, the negative equity rate was 27 percent in the fourth quarter, up from 23.2 percent in the third quarter.

To some extent, the escalation of negative equity is the result of lenders temporarily curtailing foreclosures the last several months amid investigations of their internal foreclosure procedures. While declining home values raise negative equity, completed foreclosures tap it back down because the home becomes lender-owned.

Also figuring into the situation in Illinois is the fact that it’s a judicial state, meaning foreclosures have to navigate through county courts, giving homeowners longer  to try and save their home. However, it also lengthens the amount of time it takes for foreclosed properties to return to the real estate market for resale.

“The length of (Illinois’) foreclosure pipeline is going to be a lot longer than a lot of other states,” said Zillow chief economist Stan Humphries. “And that’s definitely a factor in how quickly a market can heal itself. You start to accumulate inventory that’s in limbo. It’s in foreclosure but you can’t buy it. It spooks buyers because they know there’s a lot of supply waiting in the wings. It creates a lot of uncertainty.”

Zillow also said that home values in the Chicago area fell 11.3 percent year-over-year in the fourth quarter while values fell 5.9 percent nationally. More than 40 percent of homes sold in the Chicago area in December sold at a loss.

Zillow’s home value index does not include foreclosures or foreclosure resales.

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  1. 007 Feb. 9 at 8:31 a.m.

    Well, that’ll happen when:

    a)People assume that real estate prices never, ever, go down so overbuy today because tomorrow you’ll be able to afford it


    b)because they had to overbuy and didn’t want to pay PMI, they did shaky things like take out one mortgage for 80% of the house’s selling price and another for 20% of the selling price, basically financing 100% of the cost


    c)they then go on to use allegedly increasing price in their house to justify using the place as an ATM and take out HELOC’s to buy all the things that they can’t live without, like a vacation house, boats, ATV’s, etc.

    But what do I know? I’m one of those silly people who lived within my means and now have to bail out the rest of society…..

  2. MinisterR Feb. 9 at 8:42 a.m.

    It would help if only people who could afford homes were given loans (modifications) to do so. I couldn’t “really” afford my first home until I was 31 or so. Meaning, I wasn’t house poor and made a down payment. Which gave me the lower rate and no PMI.

  3. 007 Feb. 9 at 9:02 a.m.

    Exactly, MinisterR. I was 34 when I bought my first place and the bank complained that I put “too much” down (I did 25% because I didn’t want PMI and could swing the extra 5% down).

  4. Ian Feb. 9 at 11:26 a.m.

    Here we go yet again, media publishing stories on the flimsiest of Zillow stats. Zillow are notoriously unreliable when it comes to house prices. There’s no doubt the housing market is in the tank, but I’ve no time for Zillow’s fantasy figures.

  5. ejbkskk Feb. 9 at 11:37 a.m.

    Ian is right about Zillow’s inaccuracies. They will frequently comp homes outside your neighborhood, while omitting those in your very own tract. When you write to them about these mistakes, they have a standard reply, and suggest you create your own comps. The problem, is, they send erroneous info to many others before you can do anything about it.

  6. B Feb. 9 at 11:43 a.m.

    Plenty of people who put 20% down are still underwater because they bought right before the bubble burst, so those of you acting all high and mighty because you “lived within your means” and have to bail out everyone else are not thinking about the fact that most people who bought a few years back, not knowing the values would plummet historically, are underwater, no matter how much they put down. Also, they aren’t all relying on taxpayers. We bought in 2007, we’ve lost over a 1/3 of our value, so we’re underwater, but we’re making our payments, thank you.

  7. Kenneth Johnson Feb. 9 at 12:27 pm

    I think Mary Ellen may be confusing homeowners and homeowners who hold mortgages. There are a lot of people who do not have mortgages. There are also a lot of peple who do have one, but only as a tax deductable vehicle for borrowing.
    If 2 in 5 homeowners are “underwater”, that means more than half of the mortgages in the state are in trouble, taking out a conservative 20% free and clear owners. That’s much worse than the article portrays.

  8. ken Feb. 9 at 12:38 pm

    Well, Chicago has been listed as the 7th most miserable city in the US to live in. Illinois and Chicago Democrats have destroyed the economy and employment. With one of the highest tax rates in the country, Chicago has become a bad place for people and businesses. That will kill the housing market in the entire area. The good news is that Obama is creating the same environment for the entire country and all housing markets will be underwater. This seems to be Obama’s single success!!!!

  9. Bumsteer Feb. 9 at 1:07 pm

    Never rely on Zillow. Why does the Tribune entertain anything they say. Just take a look at actual sales vs ZEstimates. They’re all over the map.

  10. Chicago Steve Feb. 9 at 1:12 pm

    Yes, ken. Obama is so bad, he collapsed the housing market months before he was elected. You must think he is a god.

    Your subjective stats about Chicago being 7th in miserable places and tying that and Democrats to the collapse in housing prices is such a stretch, I’ll bet your muscles are sore.

    Actually, Arizona, California and Florida have taken the biggest hit in property values. All three have Republicans as governor for several years. Well, California did until just last month. So does that prove Republicans make bad governors? According to your logic, it does.

  11. George Jefferson Feb. 9 at 1:36 pm

    As a Realtor of 41 years here, I think 38% is optomistic. I think it’s well over 50%. (Zillow is for suckers.)

    From what I see here, we have a lot of badly informed folks. Affordability had almost nothing to do with the crash. Nor down payments. Nor Fannie and Freddie. Certainly nothing to do with “living within your means” or Barney Frank and not the President.

    You’re looking for easy answers. They do NOT exist. But if you must have one, here it is, IMHO: Wall Street greed. Greed. Pure and simple, on the part of private banking houses involved in mortgage lending on a STATE (state by state) basis. In many states with almost no regulation at all. (Why do you think most of them were headquartered in California and Florda?)

  12. MinisterR Feb. 9 at 1:37 pm

    If you are paying your mortgage and not trying to sell your home then your are not underwater. You are also, not part of the existing problem and in fact are in the minority if you would even be included in these numbers. Stop being so high and mighty OK


    B Today at 11:43 a.m.

    Plenty of people who put 20% down are still underwater because they bought right before the bubble burst, so those of you acting all high and mighty because you “lived within your means” and have to bail out everyone else are not thinking about the fact that most people who bought a few years back, not knowing the values would plummet historically, are underwater, no matter how much they put down. Also, they aren’t all relying on taxpayers. We bought in 2007, we’ve lost over a 1/3 of our value, so we’re underwater, but we’re making our payments, thank you.

  13. Tired of Closed Minded Idiots Feb. 9 at 2:33 pm

    007 and MinisterR…get a clue! I put 30% down when I bought my house, right before the bubble burst. I am a professional at a high level and lost my job 4 months after buying my house. My savings is now gone, my house is worth $100K less than the balance I owe on it. I was clearly able to afford my house when I bought it and I paid for it for over 4 years after losing my job. But being in the midst of the most significant economic downturn we have experienced since the great depression things change. I strongly suggest you read more than an article or two before jumping on the general public. MOST of the foreclosures coming down the pipeline these days are NOT people who could not afford their homes. They are the result of changes in circumstance and a market in such significant decline that people are left with no other choice.

  14. john Feb. 9 at 2:34 pm

    Agree with what others have said. It’s a paper loss until they sell. I don’t see a lot of houses moving in Lincoln Park and Lakeview and honestly the asking prices are basically the same as they were at the peak of the bubble. I see a lot of listings for single families in 60614 and 60657 that sold as recently as 2006-7 and the asking prices now are either the same or higher than the last sale price. Not surprisingly these homes don’t seem to be moving either.

  15. Milo Feb. 9 at 2:51 pm

    Ken….let me know when you’re moving, I’ll help you and your army of illegitimate children pack up the camper…..

  16. 007 Feb. 9 at 2:52 pm

    “Tired”, your post reminds me of a Homer J. Simpson quote: “you mean bubbles can burst????”

    I have a clue…several in fact. See item “A” in my post to find your clue, and then read john’s post after yours. Find a responsible adult to help you with the really big words….

  17. Gary Feb. 9 at 4:09 pm

    Just remember, people. If you sell at a 40% loss you can most likely BUY at a 40% gain. Lose on the sale, gain on the buy. It’s all relative.

  18. Yolanda Feb. 9 at 4:35 pm

    I am sick of these smug comments from people who “live within their means.” I am one of millions of Americans who had a spouse who was suddenly underemployed. I count myself lucky! Some people don’t have a spouse who could find any work. You too could be in my situation…trying to make ends meet with a credit card or HELOC and hoping things turn around. The financial markets played a large role in the collapse of real estate in the U.S. Get your facts straight.

  19. mike b Feb. 9 at 5:07 pm


    You still OWE the original amount on your mortgage. Many things are relative, but this certainly isn’t one of them. Do you think the bank will just let you write that amount off (like most corporations do)?

  20. MinisterR Feb. 9 at 5:45 pm

    I am sick of your ignor Rant comments.

    Until you actually go to sell your home you don’t know what it will be worth or sell for Period.

    This article is about that and not about what you think your home might be worth. If your are paying your mortgage and aren’t selling you can’t be under water. My 401k’s value in today’s market means nothing, it only maters when I approach retirement and when i actually draw from it.

    The supposed foreclosure bail-outs (stimulus for modifications) failed. Not sure why, but that concept/program should help people Yolanda.

    Finally, I am sorry you can’t handle the words “live within my means”. That is your problem. When I first shopped for a mortgage I was approved for some amount that shocked me 5 or 6 times my salary. (I didn’t even count my wife’s income either. There was and still is something wrong with that system and math. Ultimately, I chose not to buy in the absolutely best neighborhood and buy the absolutely best house and spent less than 3 times my “own” income. So that i would have a big cushion if I lost my job. Lucky or not that is the sacrifice I made. If I lose my job for 2 years I will not lose my house.

    That is living within my means. Maybe you should have thought about that before you over obligated yourself.

  21. MinisterR Feb. 9 at 5:48 pm

    I forgot to add that I saved for TEN Years to ensure that I had a big down payment. So when i bought a house for 3 times my income I was able to pay down that debt with a big down payment. I lost a ton of value in my home as well but since my mortgage was reduced by nearly 1/3 due to my TEN YEARS of saving I was not worried.

  22. James Feb. 9 at 6:28 pm

    That’s right “minister”, everybody who is having problems is a reckless fool and deserves your pretentious condesending scorn.

    The real question is if you’re such a smart, forward thinking captain of free enterprise: Why do you feel the need to come on here to post such arrogant, hateful self-promoting drivel?

  23. Anonymous Feb. 9 at 8:43 pm

    007….you are bang on!

  24. 007 Feb. 9 at 9:41 pm

    Hey Yolanda, I guess mine is bigger than yours than, because I not only managed to hang on to my house after 2 years of being out of work, I did so WITHOUT a spouse’s income to help out. And with out loan modifications or 99 weeks of UI or any of the help that the people have received since this “bubble” burst. So I have a pretty good idea of how things can be, given that I have lived the situation myself.

    I also have my facts straight. Too many people who were not financially capable of buying a house got loans thanks to government coersion. Like MinisterR, I, too, “underbought” in the words of a banker. In fact I even had one sales rep inform me that a house payment should hurt a bit, trying to convince me that between real estate values going up and pay increases, the pain would subside in a few years. Unfortunately for her, I wasn’t stupid enough to fall for that, and that gives me the right to be smug. That along with paying the bills for the people who bought into the nonsense and now can’t pay.

    There’s a saying that if you throw a rock into a pack of dogs, the one that yelps is the one that got hit. From all the indignant posts here, it looks like the one rock richocheted. And the truth hurts, but it is the truth.

    But given that so many people here don’t understand the concept of a paper loss not being a real one until you actually sell the item, I guess I now understand why the country is in the mess that it is.

  25. nelsonbentz567 Feb. 10 at 3:40 a.m.

    Mortgage refinancing means re-funding the mortgage loan with better terms as well as conditions, most likely from a different lender. It is one way to save money. Search online for 123 Mortgage Refinance they found me 3.1% refinance rate and also gave free analysis of my mortgage.

  26. James Feb. 12 at 1:03 a.m.

    The best option is here… stop-the-bank-save-your-home.weebly.com

    Stop the bank is your 1st move! Then you can keep your Home…This is what you need. Do not waste your time and money on any other idea! If you do you will loose your Home…Save it Now…