This morning’s release of the April S&P/ Case Shiller home price indices finally provides evidence that the Chicago area is gaining ground against several other major metropolitan areas. The Case Shiller Chicago index for single family homes posted a +3.1% year over year change, which was the highest level in 13 months. That gain pushed it above 3 other cities on the list.
Condo home prices posted a pretty strong 3.9% year over year increase, which was the highest level in 4 months. I track the year over year gains for both of these metrics in the graph below and it shows 42 straight months of year over year gains.
For the nation as a whole the year over year gain was 5.0%, with Seattle and Portland still registering double digit gains. San Francisco dipped below 10% a few months ago. I guess there is a limit to how long you can go crazy.
The interesting aspect to these numbers is that this is the first real, hard data that Chicago home prices are picking up steam in response to exceptionally low inventory levels.
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, provided these thoughts on the national home price picture:
The housing sector continues to turn in a strong price performance with the S&P/Case-Shiller National Index rising at a 5% or greater annual rate for six consecutive months. The home price increases reflect the low unemployment rate, low mortgage interest rates, and consumers’ generally positive outlook. One result is that an increasing number of cities have surpassed the high prices seen before the Great Recession. Currently, seven cities – Denver, Dallas, Portland OR, San Francisco, Seattle, Charlotte, and Boston – are setting new highs. However, the outlook is not without a lot of uncertainty and some risk. Last week’s vote by Great Britain to leave the European Union is the most recent political concern while the U.S. elections in the fall raise uncertainty and will distract home buyers and investors in the coming months. The details in the S&P/Case-Shiller Home Price data also hint at possible softness. Seasonally adjusted figures in the report show that three cities saw lower prices in April compared to only one city in March. Among the 20 cities, 16 saw either declines or smaller increases in monthly prices in the seasonally adjusted numbers.
Speaking of the seasonally adjusted changes…with a 2.0% increase from March, Chicago actually came in second place among the 20 metro areas tracked. That would be an indication that we are definitely gaining on the rest of the country after lagging for so long.
Case Shiller Chicago Home Price Index By Month
The graph below plots the underlying indices (not seasonally adjusted) for Chicago single family homes and condos going back to January 1987 along with a trend line that reflects the average growth rate prior to the housing bubble. All the squigglyness going on in there is seasonality and oddly enough before the bubble burst that effect was not very pronounced.
Single family home prices were up in April by 2.0% (just coincidentally the same as the seasonally adjusted numbers), which is the largest one month change in 25 months. Condo prices were up 1.9%, tied with the March gain for the highest level in 23 months.
These gains still leave Chicago single family home prices 21.1% below the peak and condo prices 14.9% below the peak. So that means that single family home prices are still lower than they were during the entire period from August 2003 until January 2009 and condo prices are still lower than they were from February 2004 through February 2009.
Nevertheless, substantial progress has been made with single family prices having recovered a total of 29.4% from the bottom and condo prices having recovered by 40.9%.
As for that trend line…the graph sort of makes it look like we’re pulling farther and farther away from it. Right now we are 24.4% below it still.
#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.