Cash has been king in Chicago's markets, after the subprime meltdown.

The subprime mortgage market collapse in 2007 heralded a new era of lending, one defined by caution and conservatism – and as a result, as housing demand continued to grow, mortgage supply dwindled.

But as a new study by the Institute of Housing Studies at DePaul University points out, in the Cook County markets, cash transactions have stepped in to fill that void, especially in high-foreclosure areas, where cash financed an incredible 70 percent of transactions. Here are some of the studies other major findings:

• Between 2005 and 2011, financed home purchases declined by 76 percent and all-cash purchases increased by 12 percent. By 2011, 45 percent of the total residential property sales in Cook County were cash purchases, up from just under 15 percent in 2005.
• Geoff Smith, the author of the study, said the high-foreclosure areas (where 25 percent or more of homes are in foreclosure) that saw the most cash sales included Englewood, Roseland, North Lawndale, Austin and West Garfield Park.
• The vast majority of REO sales were also purchased with cash. In 2011, 74 percent of sales out of REO status were completed using cash, and in those high-foreclosure areas, nearly 90 percent of purchases out of REO status were with cash.
• The share of two-to-four unit buildings purchased with cash also increased substantially, from 13 percent in 2005 to 56 percent in 2011; for condos, the share rose from 17 percent to 53 percent.

Though units are moving, Smith was clear that this is an unorthodox way for real estate to function. “It’s probably a short-term phenomenon,” he said. “I don’t think this is an ideal recovery.” Once a housing recovery becomes more apparent, Smith explained, banks will resume a normal volume of lending – and then the market will have returned.