S&P released the December Case Shiller home price index this morning for the Chicago metro area and 19 other areas. The Case Shiller Chicago index showed a bit of improvement in our year over year price increase but we are still lagging all but one other metro area – Washington DC.
The graph below shows the historic year over year changes. Single family home prices (the blue line) rose by 2.4% in the last year while condo prices rose by 4.3%. But compare that to 5 metro areas that had gains that were either close to 10% or more than 10% and it looks pretty pathetic.
From a historic perspective both single family homes and condos have been racking up year over year gains for just over 3 years now and single family homes had the largest gain in 9 months during December. You can see the blue line ticking up in the last few months.
The graph below tracks the actual index values over time. As you can see we were in the seasonal downturn portion of the year during December – good time to buy a home. Single family home prices actually declined by 0.4% from November but if you take the seasonality out they rose by 0.9%, which is actually in line with the other metro areas. That could be an indication that Chicago area home prices are about to start catching up with the rest of the nation, which would make sense given how ridiculously low our inventory levels are. Meanwhile, condo prices declined by 1.2% from November.
The average Chicago area home is still worth significantly less than it was at the September 2006 peak. Single family homes are still down 23.0% and condos are down 17.5%. That means that single family home prices are lower than they were during the entire period from May 2003 – January 2009 and condo prices are lower than they were from July 2003 – December 2009.
All of that despite considerable gains from the bottom, with single family home prices recovering a total of 26.4% and condo prices recovering by 36.5% since those dark days. And when you compare single family prices to the trend that was in place up until the housing bubble (the red line below) we are lagging that by 25.3%.
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, noted that the rest of the country may be losing steam:
While home prices continue to rise, the pace is slowing a bit. Seasonally adjusted, Miami had lower prices this month than last and 10 other cities saw smaller increases than last month. Year-over-year, seven cities saw the rate of price increases wane. Even with some moderation, home prices in all but one city are rising faster than the 2.2% year-over-year increase in the CPI core rate of inflation.
Sparked by the stock market’s turmoil since the beginning of the year, some are concerned that the current economic expansion is aging quite rapidly. The recovery is six years old, but recoveries do not typically die of old age.
He stole that dying of old age line from Janet Yellen.
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.