The writing has been on the wall for a while now but the data just came in and confirmed it. The Case Shiller home price index for Chicago was released a few minutes ago and it was pretty much what we’ve been expecting: further home price declines in Chicago. In fact, both single family and condo prices are heading for a triple dip. For single family homes prices were down 1.5% in the last month, or 5.6% year over year. Condominium prices were down 2.4% or 9.3% year over year. The graph below shows the history of these numbers along with a long term trendline in red. As you can clearly see prices are heading down for the third time now, having previously recovered from two prior declines.
This means that single family home prices are back to October 2002 levels, having fallen a total of 26% from the peak. Condominium prices are back to July 2002 levels and have fallen a total of 22.5% from their peak. The only bright spot (if you can call it that) is that single family home prices are now 13.2% below the trendline above, which is approaching an all time high for the valuation gap.
The Case Shiller index is based upon a 3 month moving average so it includes price data as far back as July, which was the first month in a long while to show year over year declines in closings. In other words, this is the first release of the Case Shiller in a while that represents 3 solid months of declining sales volume, and it won’t be the last. By the time we get to the October and November indices it’s likely to get real ugly.