Case Shiller: Chicago Area Home Price Appreciation Slows To 3 Year Low

Dow Jones S&P CoreLogic released the March Case Shiller home price indices this morning and they show that home price gains across the nation continue to slow down. In particular, the Case Shiller Chicago area index for single family homes in March resulted in the lowest year over year gain in 37 months at 1.8%. Condo prices advanced by 2.1%, the same as in February. You can see the history for both types of homes in the graph below. Once again, condo prices are rising faster than single family home prices.
For the nation as a whole single family home prices rose by 3.7% over the last year but the 20 metro areas tracked by Case Shiller only appreciated by 2.7% on average. The Chicago metro area remains 4th from the bottom of the 20 metro areas in terms of annual appreciation rate – still ahead of the 3 California metros tracked.

Case Shiller Chicago Year Over Year
Chicago area home prices have shown annual gains for 77 consecutive months.

David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, nicely summarzied where we are and what might be behind the numbers:

Home price gains continue to slow. The patterns seen in the last year or more continue: year-over-year price gains in most cities are consistently shrinking. Double-digit annual gains have vanished. The largest annual gain was 8.2% in Las Vegas; one year ago, Seattle had a 13% gain. In this report, Seattle prices are up only 1.6%. The 20-City Composite dropped from 6.7% to 2.7% annual gains over the last year as well. The shift to smaller price increases is broad-based and not limited to one or two cities where large price increases collapsed. Other housing statistics tell a similar story. Existing single family home sales are flat. Since 2017, peak sales were in February 2018 at 5.1 million at annual rates; the weakest were 4.36 million in January 2019. The range was 650,000.
Given the broader economic picture, housing should be doing better. Mortgage rates are at 4% for a 30-year fixed rate loan, unemployment is close to a 50-year low, low inflation and moderate increases in real incomes would be expected to support a strong housing market. Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat. The difficulty facing housing may be too-high price increases. At the currently lower pace of home price increases, prices are rising almost twice as fast as inflation: in the last 12 months, the S&P Corelogic Case-Shiller National Index is up 3.7%, double the 1.9% inflation rate. Measured in real, inflation-adjusted terms, home prices today are rising at a 1.8% annual rate. This compares to a 1.2% real annual price increases in housing since 1975.

Case Shiller Chicago Area Home Price Index By Month

The March Case Shiller Chicago area index for single family homes was up 0.6% and the condo index up 1.2% from February as the window moves into prime time for the real estate market. You can see the historical pattern for these indices in the graph below.
The Chicago area has nicely recovered from the bottom of the housing market crash. Single family home prices are now 38.8% higher and condo prices are 52.9% higher. However, that doesn’t change the fact that single family home prices are still 15.4% below the peak and condo prices are 7.6% below the peak. In fact, single family home prices are still below the levels they hit from June 2004 – November 2008 while condo prices are lower than they were from May 2005 – November 2008.
You can get a slightly different historic perspective by comparing where we are today with the red trendline included in the graph, which I constructed by analyzing the pre-bubble period for single family homes. That comparison shows us falling short by 27.1% and that gap widening.

Case Shiller Chicago home price index
Chicago area home prices still have a long way to go before catching up to the bubble peak.

#CaseShiller #ChicagoHomePrices #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.

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