Well, finally, what everyone has been talking about has been confirmed in the data so now it’s real. According to this morning’s release of the September Case Shiller home price indices for single family homes prices across the nation soared by 7% in the last year. That’s the strongest gain in more than 6 years. The Case Shiller Chicago area index also took off but by a somewhat smaller 4.7%, which places Chicago’s gains second from the bottom of the 19 metro areas reporting. As you know Chicago has been trailing the rest of the nation for some time. But at least the New York metro area is behind us with a 4.3% increase.
The good news is that the S&P Dow Jones CoreLogic folks quietly revised the August numbers and, instead of the 1.2% that was originally reported they now show 2.5% for that 12 month period. Also, note that 4.7% is the highest year over year gain that the Chicago area has seen in a little over 3 1/2 years.
Condo prices also showed their highest annual gain in 1 1/2 years at 3.9%. The year over year increases for both types of homes are plotted in the graph below.
Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices, echoed the theory that many have suggested as to why we are seeing this surge in home prices:
This month’s increase may reflect a catch-up of COVID-depressed demand from earlier this year; it might also presage future strength, as COVID encourages potential buyers to move from urban apartments to suburban homes. The next several months’ reports should help to shed light on this question.
The FHFA also released their 3rd quarter 2020 House Price Index report today, which goes through September. It shows the nation’s home prices climbing by 7.8% in the last year while Chicago gained 5.5%. They look at 100 metro areas and Chicago ranked #90 on that list – pretty consistent with the Case Shiller result. They also provide this graph that shows how Chicago has performed relative to the rest of the nation and it’s pretty depressing.
Case Shiller Chicago Area Home Price Index By Month
I’ve got the monthly home price index values graphed below for both single family homes and condos along with a trend line for single family homes based on the pre-bubble years. Single family home prices were up in September by 1.2% from August while condo prices were up by 1.0%. Sadly, as you can plainly see, we still have not recovered to the bubble peak. Single family home prices are still down 9.7% while condo prices are still down 3.0%. From a historical perspective that means that single family home prices are still lower than they were during the entire period from March 2005 – February 2008 and condo prices are still lower than the January 2006 – January 2008 period.
Another fly in the ointment is that, unless we can have many more months like September, we’re never going to catch up to that trend line which has left us in the dust. We now lag it by 26.2%.
Nevertheless, the recovery from the bottom is dramatic. Single family home prices have risen 48.2% and condo prices have risen 60.5%.
#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.