Case Shiller: Chicago Home Price Gains Continue To Moderate

S&P Dow Jones Indices just released their Case Shiller home price indices for 20 metro areas including Chicago for the 3 months ending in June. As the headline indicates for the nation as a whole: “Widespread Slowdown in Home Price Gains”. The index is still showing gains year over year but at nowhere near the level of just a few months ago. In particular, the Case Shiller Chicago home price index for single family homes is no exception to this rule and is only tracking a 6.6% gain over last year. Condominium and townhome price gains have pulled back to only an 8.3% gain year over year.
In fact, Chicago’s year over year home price gains in June were actually lower than 15 out of the 20 metro areas so we are now solidly in the bottom half of the markets. The graph below puts these numbers in perspective and shows you just how much the price gains have fallen. With inventories as low as they are I would have expected stronger gains at this time of the year. Perhaps the market really is slowing? We are seeing sales that are weaker than last year, though market times are still fast for those properties that do sell.
Case Shiller Chicago Year Over Year
Keep in mind that the experts, and the futures markets, have been predicting modest home price gains of 3 – 5% per year for the next 5 years so this is totally consistent with that outlook.
David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, commented on the national picture:

For the first time since February 2008, all cities showed lower annual rates than the previous month. Other housing indicators – starts, existing home sales and builders’ sentiment – are positive. Taken together, these point to a more normal housing sector.
Bargain basement mortgage rates won’t continue forever; recent improvements in the labor markets and comments from Fed chair Janet Yellen and others hint that interest rates could rise as soon as the first quarter of 2015. Rising mortgage rates won’t send housing into a tailspin, but will further dampen price gains.

Of course, everyone has been predicting imminent mortgage rate increases for years now. Still waiting on that one. So are older people’s fixed income investments.
The graph below shows the entire history of the Case Shiller Chicago home price indices. As a reminder we are in the midst of the normal seasonal uptick for home prices. The June single family home prices were up 1.5% from May while condominium and townhome prices were up 1.0%. That puts us at the same level single family home prices were back in April/ May 2003 and then again in January 2009. Condominium prices were at this level in April 2003 and then December 2009/ January 2010.
In total single family home prices have fallen 23.0% from the peak but they have recovered a total of 26.3% from the bottom of the market. Condominium prices by comparison have fallen only 19.2% from the peak and have recovered a total of 33.7% from the bottom. But we still have a long way to go to get back on the trajectory that we were on before the whole housing bubble even started – see the red line below. We are trailing that red line by 21.1%.
Case Shiller Chicago
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