By now, Illinois’ perennial status as one of the nation’s lowest ranked states across a range of economic categories is well documented.
But as of the end of August, Illinois finally managed to battle its way to No. 1 in something. Problem is, that something is its rate of real estate foreclosures.
“The rate of foreclosure filings per household in the state was one in every 298,” reports BloombergBusinessweek.com. This astonishing rate, even as many states see precipitous declines in foreclosures, has placed Illinois in “the nation’s top spot for the first time” in records kept by data tracker RealtyTrac going back to January 2005.
On its way to No. 1, Illinois has registered eight consecutive months of year-over-year foreclosure upticks on RealtyTrac’s radar.
The irony is that while some Illinois-based businesses have fled or launched expansion projects in other states, the rate of foreclosure here has actually attracted out-of-state realtors looking to pick off bargains on abandoned, undervalued homes.
How did it happen? How did Illinois arrive at a place of such dramatic contrast, with prisons that are full and houses that are empty, while many regions of the country seeing a rebound?
One clear culprit is persistently high unemployment, much higher than the national average (8.1 percent). Chicago’s unemployment rate is stuck around 10.5 percent; through July the state’s rate was 8.9 percent. Gov. Pat Quinn’s crushing tax hikes on individuals and businesses have discouraged growth and hiring. Meanwhile, residents fortunate enough to be re-hired have not always found new jobs with pay to sustain a mortgage payment, slowing but not deterring the slog toward foreclosure.
The other formerly dependable source of jobs, the public sector, also has dried up because the state’s upside down economy no longer can support bloated agencies and vast government services. In the long term, the shrinking of Illinois government will begin to benefit taxpayers (the Illinois Policy Institute advocates cutting $500 million from human services, leaving core programs intact).
But for now, everything points to continued economic stagnation because thousands of homes that been devalued by the foreclosure process depress the overall real estate market.
RealtyTrac’s Daren Bloomquist told BloombergBusinessweek.com he expects Illinois foreclosure filings to increase in each of the remaining four months of 2012, which means numbers eclipsing 17,781 filings in August (42 percent higher than in 2011).
“It’s going to get worse before it gets better,” Bloomquist said.
Which is all but certain to bestow another dubious distinction upon Illinois: home rental paradise. Oakland, Calif.-based Waypoint Real Estate is looking at snapping up 75 to 100 homes per month to put on the rental market.
Homes where families were supposed to be raised and long-term equity built, formerly owned by Illinois workers, soon will belong to real estate vultures.