That shortage of homes for sale is really beginning to impact home prices – as you would expect. The graph below shows the historic year over year increases for both single family home and condo prices in the Chicago area and you can see how they’ve really taken off recently. S&P Dow Jones released their January CoreLogic Case Shiller home price indices this morning and single family home prices in the Chicago area rose 8.9% from a year ago. That’s the biggest increase in almost 7 years. However, condo prices are losing some steam. They were only up 4.3%, which isn’t too surprising since condo inventory is not nearly as tight as single family home inventory.
Unfortunately, the Chicago area is still losing ground relative to the rest of the country. The nation’s home prices rose a whopping 11.2% over that 12 month period and 18 of the other 19 metro areas that they track also did better than Chicago. Only Las Vegas grew at a slightly slower rate – 8.5%.
Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI, commented on how home prices are rising across the nation:
The market’s strength is broadly-based: all 20 cities rose, and all 20 cities gained more in the 12 months ended in January 2021 than they had gained in the 12 months ended in December 2020.
January’s performance is particularly impressive in historical context. The National Composite’s 11.2% gain is the highest recorded since February 2006, just one month shy of 15 years ago. In more than 30 years of S&P CoreLogic Case-Shiller data, January’s year-over-year change is comfortably in the top decile…
January’s data remain consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes. This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a shift in the demand curve for housing. Future data will be required to analyze this question.
Phoenix’s 15.8% increase led all cities for the 20th consecutive month, with Seattle (+14.3%) and San Diego (+14.2%) close behind. Although prices were strongest in the West (+11.7%), gains were impressive in every region.
Case Shiller Chicago Area Home Price Index By Month
The graph below puts all the underlying Chicago Case Shiller indices in historic perspective along with a red trend line for single family homes based on the pre-bubble times. In January single family home prices rose 0.5% from December while condo prices dropped 0.6%.
But you can plainly see how home prices are still below the bubble peak levels with single family prices off by 8.1% and condo prices off by 4.9%. That leaves a lot of people still underwater from where they bought. For instance, the average person who purchased a single family home between May 2005 and February 2008 is still underwater as is the average person who bought a condo between September 2005 and September 2008 – basically a 3 year period of higher prices than now.
Also, if you compare where we are today to that red trend line you’ll see that we are trailing it by 25.9% which is even more depressing. What could have been!
Of course, we’ve made great strides since the absolute bottom. Single family home prices have risen by 50.7% and condo prices have risen by 57.3%.
#ChicagoHomePrices #CaseShiller #HomePrices
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.