No surprise but with this morning's release of the January Case Shiller home price index for Chicago we have confirmed that area home prices have fallen since December. However, condo prices dropped like a rock! This is the 5th month of declines in what is now a well established triple dip, with single family prices declining 1.8% while condo prices declined 5.4%. We are now back to July 2001 levels for single family homes and back to December 2000 levels for condos as you can generally see in the graph below. The graph shows the historical trend back to January 1987 along with a trend line based upon the pre-bubble data for single family homes. We are currently 20.1% below that trend line, which I think represents a good value. But never trust anything that a realtor says.
Single family home prices in Chicago are now down 31.3% from the bubble peak and down 7.5% in the last year while condominium prices are down 31.2% from the peak and down 13.9% in the last year.
Home Price Forecast Contest Launched
The outlook for home prices is almost as contentious as politics. Everyone has an opinion with lots of players sitting on the sidelines waiting for their prediction to come true. Sidelined buyers think prices are going down while sidelined sellers think prices are going up. Guess what? Everyone can't be right.
So we decided to launch a Chicago home price forecast game with $500 in prize money to be divided between the top 3 players. Be sure to check out the rules so that you give yourself the best shot at winning. In a nutshell the game is set up as a prediction market - sort of like the futures market - that harnesses the wisdom of the crowd. Players can trade "shares" of the Case Shiller single family home price index for Chicago and make or lose virtual dollars in the process. I think this will be fun and if it works like it's supposed to we'll uncover the consensus view of the Chicago real estate market.
We're offering the prize money as an incentive for people to put a bit of thought into their trades. Of course prize money introduces the prospect of people trying to cheat so I want you to know that I'll be keeping an eye on the trades and any suspected cheaters will be dealt with harshly.
For those of you interested in raising your game by studying the current condition of the Chicago housing market you can always check out my collection of statistics at ChicagoHousingStats.com.