As expected the Case Shiller home price index was released this morning and showed a continued drop in Chicago home prices for the three months ending in October. Single family home prices fell an additional 2% while condo prices fell an additional 2.5%. That puts single family home prices down 6.5% during the last year and down a total of 27.5% from the peak of the bubble. Condominium prices are down 11.8% during the last year and have fallen 24.5% from the peak. You can see the long term trend in the graph below along with a trendline that I derived from the pre-bubble period. Single family home prices are currently 15% below this trendline.
Both single family home prices and condominium prices in Chicago are back to June/ July 2002 levels.
This price decline was totally expected because of the abysmal sales levels of the past few months. Unless your home is highly desirable you have to significantly discount it right now to get attention. In addition, distressed sales are making up a huge percentage (around 40%) of the sales right now and those sales occur at drastically lower prices. I expect us to see a continuation of these price declines for the next few months until we see sales volume pick up.