Case Shiller: Chicago Area Home Price Gains Lag The Nation

Remember last month when I told you how single family home prices in the Chicago area had gained 6.2% from the previous year and we had risen in the rankings of the 20 cities that Case Shiller tracks? Yeah, well forget that. S&P Dow Jones just released the March Case-Shiller home price indices and with that they substantially revised the February numbers – at least for Chicago. (To be honest I did not go back and recheck the numbers for the rest of the nation to see how they may have been revised.) So they are now showing the February year over year gain at only 5.3%.
But you probably want to know about the latest release of the Case Shiller Chicago area index and that came in with a 5.1% year over year gain for single family homes. But who knows what it will be revised to next month, right? Anyway, that’s not a bad gain but compared to the 5.8% gain for the nation as a whole we’re lagging a bit and also we are tied for 15th – 17th place out of 20 metro areas.
Condo prices also gained 5.1% from last year. To put both condo and single family price gains in historic perspective I’ve got them graphed below. We now have 53 consecutive months of home price gains in both segments of the market.
Case Shiller Chicago Year Over YearDavid M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, pointed out that the national index rose at “the fastest pace in almost three years” and went on to say:

While there is some regional variation, prices are rising across the U.S. Half of the 20 cities tracked by the S&P Corelogic Case-Shiller indices rose more than 6% from March 2016 to March 2017. The smallest gain of 4.1%, in New York, was roughly double the rate of inflation.
Sales of both new and existing homes, housing starts and the National Association of Home Builders’ sentiment index are all trending higher. Over the last year, analysts suggested that one factor pushing prices higher was the unusually low inventory of homes for sale. People are staying in their homes longer rather than selling and trading up. If mortgage rates, currently near 4%, rise further, this could deter more people from selling and keep pressure on inventories and prices. While prices cannot rise indefinitely, there is no way to tell when rising prices and mortgage rates will force a slowdown in housing.

What’s interesting here is that he echoes an idea that I have floated before: higher mortgage rates do not necessarily mean lower home prices because they can discourage people from giving up their low rates by selling, thus keeping upward pressure on prices.

Case Shiller Chicago Home Price Index By Month

The graph below shows the history of the actual Case Shiller Chicago area indices along with a trendline for single family home prices which was derived from the pre-bubble data. The March single family home price index was up 1.1% from February and the condo index was up 1.7% but don’t get too excited about those one month changes since this is the time of year when that sort of thing happens.
With these gains single family home prices have recovered by 33.3% from the bottom and condo prices have recovered 45.2%. Yet, we are still 18.8% below the peak in single family home prices and 12.3% below the peak in condo prices. Of course both of these numbers are the closest we’ve been to the peak since we’ve begun our recovery but keep in mind that single family home prices are still trailing the trendline by 24.7%.
Putting the current Chicago area home price levels in historic perspective we see that single family home prices are still below the entire 5 year period from December 2003 – December 2008 and condo prices are below the period from July 2004 – January 2009.
Case Shiller Chicago#ChicagoHomePrices #CaseShiller
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut 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.

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