This morning’s release of S&P’s January Case Shiller Home Price index once again shows Chicago in dead last place among 20 metro areas in terms of year over year home price increases. In fact, Chicago’s year over year gains actually declined from the December numbers.
Check out the historical graph below which shows that Chicago has been registering gains for more than 3 years. Single family home prices in January were indeed up by 2.1% from a year ago, but that was down from the 2.3% reported for December. The year over year gain in condo prices was down even more – 2.8% vs. 4.1% for December. To put that in perspective consider that 4 of the 20 metro areas had double digit year over year gains.
The fact that the Case Shiller Chicago index is showing such low gains is very surprising given that home inventory levels are incredibly low in the city right now and have been for some time.
At the national level David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, pointed out that “Home prices continue to climb at more than twice the rate of inflation.” That would be 5.4% year over year.
I’ve also plotted the underlying Chicago index values going back to January 1987 in the graph below along with a trend line (red) based upon the pre-bubble period. As you can see there is little evidence of us returning to the trend line in our lifetime, but that could be a function of the fact that inflation is just not what it used to be. Right now we are tracking 25.8% below that trend line.
The January index value for single family homes was down from December by 0.4% and condos were down by 0.7% but that’s normal for that time of the year. However, once you take the seasonality out, Chicago single family home prices were up 1.0% from December. Interestingly, only 4 metro areas had a higher increase on this basis. Unfortunately, that probably only means that the other markets are cooling off, not that Chicago is heating up.
At this point single family home prices have recovered by 25.8% from the bottom of the market and condo prices have recovered by 35.3%. Unfortunately, single family home prices are still down 23.3% from the peak and condo prices are down 18.3%. That leaves single family home prices still lower than the entire period from April 2003 – January 2009 and condo prices lower than the period from June 2003 – December 2009.
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.