As you know I closely follow the Case Shiller data on Chicago area home prices but when the September release pointed out that the nation’s home prices just hit a new record high, and the Chicago area is far from that, I realized that I have never actually compared the national index to the Chicago index. Boy was I in for a surprise when I did just that! It turns out that Chicago home prices have been lagging the index for quite some time.
Check out the graph below of the index values going back to January 1987. All the indices are constructed so that they are equal to 100 on January 2000. As you can see in the graph prior to that point Chicago area home prices were rising faster than the nation as a whole. But soon thereafter Chicago started lagging the nation – right around June 2002 to be exact. During the bubble years Chicago never got as bubblicious as the rest of the country yet it crashed harder than the rest of the country, falling by 39.1% while the rest of the country fell by “only” 27.4%. And now that the nation has fully recovered Chicago is still 18.2% below it’s former peak. Not to mention that the gap between the nation’s home prices and Chicago’s home prices continues to widen with Chicago now 25.4% below the nation. Also, as I routinely point out in my monthly Case Shiller updates, Chicago home prices have not returned to their trendline from before the bubble.
So what’s the deal? Is it that the Chicago area’s economy is just not as vibrant as the rest of the country’s? Are the city and state’s financial and political woes discouraging people from living here? Those are really the only possibilities, right?
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.