Report from DePaul Institute for Housing Studies details risk for foreclosure on the rise for Chicago investment properties

It seems to be Investment Week here at The Guide.

A new report from The Institute for Housing Studies at DePaul University reports on the increasing risk of foreclosures for Chicago investment property owners. 

The Institute for Housing Studies publishes research and scholarly journals and papers, statistical magazines, forecasts and trends, and a variety of conference proceedings, books, and other materials related to the housing industry.

You can read all the details of the report on this page.  The report is the first link on the page.

Foreclosures rate on multifamily properties in Chicago is rising.  Falling property values have made 30%, more than $13-billion, in Cook County multifamily mortgages at risk of default.  The report finds that there are more than 32,000 rental units in Cook County that are in foreclosure.  Loans in foreclosure on small 2-6 unit properties jumped 8.75% in the 4th quarter of 2009.

The report also says that the multi-family financing market is completely abandoned by conventional lenders.  The only two financial institutions that are making loans on multi-family properties are Fannie Mae and Freddie Mac.

Other highlights (lowlights?)

  • Prices declined 46% for small rental buildings from their peak in 2006.
  • Prices declined 26& for large rental buildings from their peak in 2007.
  • For 1 in 8 units, revenue now falls short of operating costs for owners.

Holy smokes!  Your Guide has been seeing a lot of marketing pitches for investment buildings cross his desk in recent weeks.  But I thought one of my colleagues just happened to recognize a new avenue for business and was making a push into that marketplace.  Perhaps the increase in sales pitches for investment apartment buildings is related to owners in distress. 

I’ll be sure to write again as I check with my contacts.