Foreclosures up; optimism down

Bruce Douglas poses for a portrait on the back patio of his St. Charles home on Tuesday, June 19, 2012, as the unfinished foreclosure property next door looms in the background. Douglas is trying to figure out who is responsible for cleanup of the property, which he said on top of being an eyesore is a public safety hazard to nearby residents. | Jeff Cagle~For Sun-Times Media

Updated: July 23, 2012 7:16AM

Rhonda Klecz is used to dealing with the sorry state of local real estate. Not only is she the property maintenance officer for Batavia and her hometown of North Aurora, she’s also the president of the Illinois Association of Code Enforcement. So part of her job is to keep track of homes in foreclosure to try and prevent them from turning into neighborhood eyesores.

But the bleak news hit her up close and personal when she went to get an appraisal on her own North Aurora home recently — and was informed that would be impossible. Why? Because there were too many neighboring foreclosures to get any kind of accurate number.

Of the seven houses on her block for sale, all but three were distressed properties.

And so the bad news continues.

According to the experts, that reprieve from foreclosures we saw in 2011 was little more than an illusion. The decrease was not due to a recovering market; rather, it was taking longer for lenders to get their acts together. In February, a settlement between states and banks over problems with sloppy paperwork submitted by these lenders was announced. And since then, those numbers are climbing steadily upward as banks are now catching up with those delayed foreclosures of the past year and a half.

Nationwide, foreclosures were up 9.12 percent from April to May, according to Realtytrac, a large online firm tracking such data. Here in Illinois those numbers are more grim, with foreclosure activity rising 29 percent in May compared to the previous month; and 54 percent higher than May of 2011. And the collar counties show the highest number of foreclosures in the state: including Kane County with 6,927 foreclosures; DuPage County, 8,029; Will County, 7,317; and Kendall County, 1,834.

According to Realtytrac, DuPage has one foreclosure for every 639 housing units; Kane has one for every 165; Kendall, one in every 130.

While Klecz is seeing the spike everywhere, the hardest hit include Aurora (one foreclosure for every 146 housing units); Elgin (one in 128); Sugar Grove (one in 168); North Aurora (one in 271); Yorkville (one in 117); and Elburn, (one in 189). The areas not seeing quite the problem are Naperville (one in 592); Batavia (one in 480); and Geneva, (one in 523). Data was not available for St. Charles, but Klecz says it is also one of the harder hit areas.

Linda Pilmer, who has been in real estate in the Fox Valley since 1983, never before has seen anything even closely resembling the situation we are now in. The housing crisis, she said, “changed our business tremendously” — and she believes it may take a generation to right the ship.

Counties and municipalities are scrambling to keep up with the foreclosure problem. For example, Kane County recently passed a tougher nuisance and property maintenance ordinance to help deal with partially built homes, like the 10,000 square-foot unfinished mansion in foreclosure on Bluff Drive in St. Charles, that have turned into neighborhood eyesores.

But even though communities are trying to keep up, Tim Harbaugh, executive director of development and environmental resources for Kane County, said it’s the banking industry and economy in the driver’s seat. Pilmer agrees that it’s a federal and state problem, adding that the issue won’t start to get resolved until the job market improves and an obviously unsustainable pension system is aggressively addressed.

“Real estate taxes used to be 2.5 percent the value of the property,” she said. “Now it’s between 5 and 8 percent.”

The experts sees some shades of silver behind the black cloud. For one thing, banks are now speeding up the foreclosure process, which means 2012 will likely see more short sales or auction sales rather than repossessions. And as Pilmer noted, there’s a sense of resiliency from the community as people realize “we all need to pull together to get through this.”

At the same time, she added, “there’s an awful lot of really sad stories out there.”

That statement is backed up by an administrator with a large Fox Valley funeral home who told me the number of suicides the chapel has dealt with the last couple years has “risen exponentially.” When I asked him to be more specific, he paused for only a moment.

“I would say that number has gone up tenfold,” he said. “Most of them don’t make the obituary pages. But it drives home what is happening out there.”

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