This week's Crain's Chicago Business has a big cover story, "Foreclosure Fallout," on the impact the subprime mortgage crisis is having in Chicago neighborhoods, both city and suburban. Since you can't read it online unless you subscribe, stay with me here for some of the details.
Over 800 Austin homeowners lost their homes to foreclosure last year, the most of any Chicago neighborhood. Although home prices have fallen in Austin after a steep three-year rise, prospective buyers are finding it harder to get a mortgage due to the credit crunch. Homes sales have plunged to 79 in the last six months, from 192 in the same period the year before.
It's well known that empty houses often become nests of drug dealing and prostitution. I see it firsthand. We have an empty house on my block, and it's been a constant battle to keep squatters involved in those illegal activities out. Right now we're winning, but that could change any minute.
The Crain's story also profiles a pastor fighting drug trafficking in abandoned houses in Humboldt Park and a Logan Square business owner whose cafe, Cherubs, has seen sales fall 20 percent since December.
Times are tough and will get tougher. Many homes bought with adjustable-rate mortgages will shift to higher interest rates over the next two years. This includes the house next door to me, which is in worse shape than mine and costs my neighbors at least $200/month more than mine costs me. They are talking about selling when the mortgage resets, but I shudder to think how hard it will be for them to find a buyer. There's a brand-new brick three-bedroom house across the street that's been on the market for nearly a year.
Despite all the gloom and doom, a few relentless optimists remain in action. One is Carlos Nelson of the Greater Auburn Gresham Development Corporation. I stopped by his office a couple of weeks ago and asked how the mortgage crisis and slowing economy were affecting Auburn Gresham. Rather than give me a long list of new businesses on 79th Street or an explanation of how one person's challenge is another opportunity, Carlos and board member Byam Alexander shifted gears from community developers to rap artists and delivered a quick remake of this famous Public Enemy song:
We ain't in a recession
We in a progression
On the 7-9
Don't. . . don't. . .don't. . .don't believe the hype!