With 2 months in a row of really healthy home price increases in Chicago you can’t help but wonder if maybe the bottom is in for home prices. After all, this is the third time that prices have bounced up since the bubble burst and just maybe the third time is a charm.
S&P just released the June Case Shiller home price index for Chicago single family homes and condos and it shows that single family homes rose 3.2% from May while condo prices rose by 4.3%, which is actually the third month in a row of increasing condo prices. In fact, condo prices are up almost 10% in just the last 3 months. Of course home prices always rise during this time of the year but this is still an increase even after adjusting for the normal seasonal effects. But before I call another false bottom I’d like to know if we are heading into another recession because if we are all bets are off.
As measured from June of last year single family home prices are still down by 7.4% while condo prices are down by 13.4%. Single family homes have lost a total of 31.4% of their value since the peak of the housing bubble and are now back to July 2001 levels while condos have lost 29.9% of their peak value and are back to April 2001 levels.
You can see the whole sordid story in the graph below, which includes a long term trend line. We are still almost 22% below that trend line.
Home Price Forecasting Contest Has Ended
With this release of the Case Shiller home price index we have ended our forecasting contest. Winners will be announced soon.