By Cole Lauterbach/Illinois Radio Network

SPRINGFIELD – Illinois’ sluggish economy has claimed another victim: home values.

A new report by ATTOM Data Solutions on homes that are valued at least 25 percent under their outstanding mortgage debt reveals that more than 500,000, or nearly 20 percent, of homes in Illinois fit that description, only a couple points better than Nevada.

ATTOM Vice President Daren Blomquist said the biggest determinant in an underwater-loan situation is the value of the home, which is based on market demand. For states like Illinois, Blomquist said the main culprit in the glut of underwater homeowners is its foundering job market, which is creating a smaller pool of home buyers.

“The economy has not been a huge driver in a lot of other areas, but at least it’s been a bit more robust than what we’ve seen in Illinois,” Blomquist said. “That’s the number-one factor. Jobs and wage growth will drive more purchases of homes and people being able to afford more expensive homes as well.”

Blomquist said high property taxes also keep buyers out of the market, further reducing home value.

“The higher property tax rates that we see in Illinois compared to other states does have a dampening effect on home-price appreciation,” Blomquist said. “If you have low property taxes, that’s not an expense that homebuyers will have to take into account with home ownership.”

Ironically, Blomquist says high property taxes have a mitigating effect on a major housing crash, since home prices would already be somewhat lower than market averages.

Other high-property tax states such as New Jersey also have high numbers of underwater homeowners.

While any home that is valued below the outstanding mortgage debt is considered underwater, homes at least 25 percent behind in their debt are likely to hold the underwater distinction regardless of fluctuating home values.