Case Shiller: Chicago Home Price Appreciation Strengthens While Nation Slows

Case Shiller: Chicago Home Price Appreciation Strengthens While Nation Slows
While the rest of the nation weakens, Chicago
home prices are showing signs of greater strength

According to the October Case Shiller home price index recently released by Dow Jones S&P CoreLogic the nation's single family home price appreciation slowed down a bit in many of the nation's markets. While year over year gains for the nation as a whole stayed the same from September at 5.5% the 10 city composite weakened to 4.7% from 4.9% and the 20 city composite dropped to 5.0% from 5.2%. However, the Case Shiller Chicago area index actually showed signs of strengthening with a 3.3% gain - the highest level in 11 months. Despite this shakeup the Chicago metro area still ranks 3rd from the bottom among the largest 20 metros with regard to home price appreciation.

Meanwhile, the condo index for the Chicago area posted a 2.6% year over year gain in October, which is not much different than September's 2.5% gain. Condo appreciation has declined quite a bit over the last year. The graph below gives you some historic perspective on both condo and single family home appreciation. October marked the 72nd consecutive month that home prices in the Chicago area rose from the previous year.

Case Shiller Chicago Year Over Year

Chicago area home prices have shown annual gains for 72 consecutive months.

David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, seems to think that high home prices are a major contributing factor to slowing home sales:

Home prices in most parts of the U.S. rose in October from September and from a year earlier. The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house. Fixed rate 30-year mortgages are currently 4.75%, up from 4% one year earlier. Home prices are up 54%, or 40% excluding inflation, since they bottomed in 2012. Reduced affordability is slowing sales of both new and existing single family homes. Sales peaked in November 2017 and have drifted down since then.

This is a popular theory but then I'd expect home prices to actually be going down and I don't think we're seeing any signs of that so far. If we do I suspect that it will be because of economic concerns.

Case Shiller Chicago Area Home Price Index By Month

The graph below shows the actual Chicago area Case Shiller index values by month. You can clearly see how we are now entering the normal seasonal decline in home prices. Accordingly, single family home prices fell 0.3% from September while condo prices fell 0.4%. That leaves single family home prices 14.3% below the bubble peak and still lower than they were during the entire period from August 2004 - October 2008. Condo prices are still 7.3% below the peak and lower than they were from June 2005 - November 2008.

Also, if you look at where single family homes are relative to the pre-bubble red trendline we are trailing that by 24.9%. Nevertheless, single family home prices have recovered 40.7% from the bottom while condo prices have recovered 53.5%.

Case Shiller Chicago

Chicago area home prices still have a way to go before catching up to the bubble peak.

#ChicagoHomePrices #CaseShiller

Gary Lucido is the President of Lucid Realty, the Chicago area's full service real estate brokerage that offers home buyer rebates and discount commissions. 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.

Enter your email address:Delivered by FeedBurner

 

Leave a comment