Years after the Great Recession, Chicago-area homeowners are still trying to recover
Mitchell and Loria Versher say they were looking for one thing when they bought their first home in the Chicago suburb of Markham: “Stability.”
They might have been better off buying swampland in Florida.
In retrospect, July 31, 2007, was a bad day to go shopping for property anywhere.
But the modest 900-square-foot Cape Cod-style home the Vershers bought that day for $137,000, on the eve of the worldwide credit crunch, has fared especially badly, by any standard.
Despite being well-kept, with a neatly trimmed lawn and hedges, four bedrooms and a two-car garage, it sits across the street from an abandoned home and was listed for sale in January for just $29,500.
“After serving in Vietnam and working all my life, this just seems like a failure of justice,” said Mitchell Versher, 68, an Army veteran and security guard. “We thought we were getting the American dream and a measure of stability at this stage in our lives.”
Instead, the Vershers find themselves not so much underwater as buried in a cave beneath the ocean floor. Loria Versher was laid off from her job, and court filings associated with the couple’s 2-year-old foreclosure case show that, with late fees and a 2013 loan modification, they owe Nationstar Mortgage $180,000.
Their situation represents only an extreme version of a financial trap in which homeowners across predominantly African American parts of the south Chicago suburbs and in pockets of mainly Latino and white ethnic suburbs just south of O’Hare International Airport continue to struggle, almost seven years after the official end of the Great Recession.
The housing crash might seem like old news, but for families left behind by the recovery it remains a defining economic reality, with negative equity-preventing moves and limiting choices in life.
At the end of 2010, almost 31% of Chicago-area homeowners with a mortgage were underwater, owing more on their loans than the properties were worth, according to housing analytics firm CoreLogic. Five years later, in 2015’s fourth quarter, the percentage of underwater homeowners was nearly 17%, topped only by the 22% of homeowners in Miami and 21% in Las Vegas-Henderson, Nev.
Although the median prices of homes in suburbs across the Chicago region continue to be below the inflation-adjusted prices they commanded pre-crash — even in tony Winnetka, the median home sold for 29% less last year than in 2005 — a map of house price changes over the last decade tracks closely with racial boundaries and shows that residents of blue-collar suburbs who were less equipped to absorb such a huge hit to their wealth are the worst affected.
The question for many in these towns is no longer when they will recover, but if they ever will.
Cook County’s top 10 towns for foreclosures are all in the south suburbs, according to data compiled by the Institute for Housing Studies at DePaul University. Residents on a typical block in middle-class towns such as Matteson, Country Club Hills and Richton Park can expect one of their neighbors to be in foreclosure, because about 1 in 30 homes was in foreclosure as recently as 2014.
In a handful of the county’s poorest towns — Harvey, Ford Heights, Phoenix, Riverdale, Robbins and Sauk Village — more homeowners are foreclosed upon than obtain new mortgages, a surefire recipe for vacant homes, declining tax bases and blight.
Only in one Chicago-area town, Lisle, have inflation-adjusted prices risen modestly back above their pre-recession prices, to $261,000.
“The housing market is a good reflection of the uneven recovery of the economy overall,” and may help explain why consumer confidence lags so far behind other economic indicators, said Geoff Smith, executive director of the Institute for Housing Studies at DePaul University.
Though boom times have returned to a handful of hip Chicago neighborhoods and well-to-do suburbs that were not so badly affected, “a good half to two-thirds of the housing market is still trying to get back to where it was, and a third is still at pre-2000 prices,” Smith said.
Given how much of most homeowners’ wealth is tied up in their homes, that’s a serious brake on the Illinois economy. But without some widespread principal reduction program for underwater homeowners of the type being considered in a more limited form by mortgage finance giants Fannie Mae and Freddie Mac, Smith said, recovery will take a “a lot of patience” and “is not necessarily realistic for a lot of neighborhoods.”
John Petruszak, executive director of the South Suburban Housing Center, which helps homeowners with distressed mortgages, said that recovery in largely African American south suburbs “is going to take a long time,” and that some form of debt forgiveness or other assistance for struggling homeowners is needed.
“Everybody seems to think we’ve recovered from the housing crisis, but for many communities of color that’s not the case,” Petruszak said.
As for the Vershers, the couple have friends who walked away from mortgages that no longer made sense, but Mitchell Versher said that wasn’t his style, and that if his wife hadn’t suffered a couple of layoffs, or if they were able to renegotiate their debt again, he’d have liked to stay put.
Still, he and his wife expect ultimately to be forced from their home. And any hope Mitchell Versher had of retiring is gone.
“I’m gonna have to work till I die,” he said. “Don’t get me wrong, Vietnam taught me that I’m blessed for every moment that I have. But the majority of us who are living paycheck to paycheck are being held hostage by an indifferent political class.”
He’s looking online for a rental, he said.
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