Case Shiller: Chicago Home Prices Back On The Rise

S&P Dow Jones Indices released the January Case Shiller home price index this morning, including numbers for Chicago and 19 other metro areas. The Case Shiller Chicago numbers show that home prices are rising once again after a rather sluggish 2014 that resulted in a meager 1.4% gain for single family homes and a 1.1% gain for condos.
However, with today’s release it looks like Chicago home prices are gaining steam again. Single family home prices are up 2.5% year over year and condo prices are up 4.1%. You can see the uptick in the graph below.
OK. One data point does not a trend make. But it’s a start. And this is the 27th month in a row of rising home prices.
Incidentally, when compared to the other metro areas it looks like Chicago’s single family gains put it in the bottom quartile. Denver is in the number 1 spot with an 8.4% year over year increase.
Case Shiller Chicago Year Over Year
In the headlines on this release you will likely hear that home prices were down in January – from December. That is correct, as is normal at this time of the year. Single family home prices dropped by 0.2% but condo prices actually went up by 0.5%. This puts single family home prices back at the levels we first hit in January 2003 and then again in February 2009. Condo prices were at these levels in December 2002 and then January 2010.
From the bottom of the market single family home prices have recovered by 23.4% and condo prices are up 31.6%. But prices are still down by a large amount from the peak, with single family prices down 24.8% and condo prices down 20.5%.
You can also look at my long term trend line and see the huge gap – we’re 24.6% below trend. However, as one of my clients pointed out that trend was derived from a period that included some very high inflation years that might have set the bar pretty high.
Case Shiller Chicago
 
In commenting on the national picture, David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices, said that home prices should continue to go up but they could go down (yeah, I know):

The combination of low interest rates and strong consumer confidence based on solid job growth, cheap oil and low inflation continue to support further increases in home prices…Despite price gains, the housing market faces some difficulties. Home prices are rising roughly twice as fast as wages, putting pressure on potential homebuyers and heightening the risk that any uptick in interest rates could be a major setback. Moreover, the new home sector is weak; residential construction is still below its pre-crisis peak. Any time before 2008 that housing starts were as low as the current rate of one million, the economy was in a recession.

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