The Case Shiller home price index for July was just released by S&P Dow Jones Indices for the 20 metro areas they follow, one of which is Chicago. As the headline of the release indicates there was “Broad-Based Easing of Home Price Gains”. The same was definitely true for the Case Shiller Chicago index, which placed Chicago 16th out of the 20 metro areas in terms of year over year price gains. Chicago is definitely lagging the rest of the country.
Home prices were still up in Chicago for July – both over June and relative to last year but as you can see in the graph below those year over year price gains have been declining now for a while – in fact this is the lowest gain in 18 months at 4.0% for single family homes. The condo price gains are also slowing down and were up only 4.7%, or the lowest gain in 20 months.
With inventories so low and market times so fast it’s a bit of a surprise that prices aren’t up more. However, these numbers are more in line with the long term thinking of so-called real estate experts.
The graph below shows the long term history of the actual Chicago home price index and you can clearly see the nice price recovery we’ve been experiencing over the last couple of years. Single family home prices are the highest they’ve been since January 2009 while condo prices are the highest they’ve been since December 2009.
When you compare July to June single family home prices were up only 0.6% and condo prices were up only 0.2% – definitely pretty meager compared to what we saw last year at this time. So single family home prices and condo prices pretty much ended up back where they were in May 2003.
Single family home prices are still 22.5% below the bubble peak and condo prices are 18.9% below that peak. However, there has been considerable improvement off the lows with single family home prices having recovered 27.2% and condo prices having bounced back by 34.3%.
And if you compare single family home prices to that long term red trend line in the graph below it turns out that it’s still trailing by 20.8%. We’ve still got a long way to go to get back to any semblance of normal in my opinion but it certainly doesn’t look like it’s going to happen any time soon.
David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, tried to put a positive spin on the data.
“…home prices continue to rise at two to three times the rate of inflation. The slower pace of home price appreciation is consistent with most of the other housing data on housing starts and home sales. The rise in August new home sales — which are not covered by the S&P/Case-Shiller indices – is a welcome exception to recent trends.
While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years.
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