The release of the Chicago Case Shiller home price index for December just a few minutes ago confirms the long awaited turnaround in Chicago home prices. Although the index was down from November it was up from the previous year, continuing what we hope is a pattern of increasing year over year home prices started in November. If you will recall November was the first time in 6 years that Chicago experienced an increase in home prices over the previous year.
The graph below shows the Case Shiller index of home prices in Chicago going back to 1987 along with my trend line extrapolated from the non-bubble years. Single family home prices are now 27.8% below that trendline, which you would think bodes well for future price increases. Nevertheless, single family home prices have fallen a total of 33.2% from their peak. The good news is that prices are still 9.6% above the low point of last March. The bad news is that prices are still back to the levels of May/ June 2001.
The index for single family homes for December actually fell by 0.7% from November but that is part of a well established seasonal pattern that we have seen over the last few years. The reason that prices rose on a year over year basis is because December prices didn't fall as much as they did last year at this time.
Condo prices in Chicago fell by 2.6% from November, which puts them 32.8% below their bubble peak but 11.1% above their March low. Condo prices are back to where they were in July/August 2000.
The year over year graph shows just how dramatically the price drops have reversed in Chicago lately. In fact, later today I'll invert the graph to show price changes instead of price drops - not something I've had to worry about for 6 years. Single family home prices were up 2.2% from the previous year, while condo prices were up 5.2%. Since this is December data it also represents the home price change for 2012.
Chicago's year over year price changes are lagging the rest of the nation except for New York, which is still showing a slight decline in home prices. For instance, the 10 city composite index was up 5.9% in 2012 while the 20 city composite was up 6.8%. In fact, these composites actually showed slight increases from November to December, which is uncharacteristic at this time of year.
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