The December Case Shiller home price index for Chicago was just released and once again single family home and condominium prices hit a new low. Actually, until this release, condo prices had not penetrated the low point of March of last year. Single family home prices barely dipped below the previous low with the last release. But with this release both indices are now well below any previous month, bringing single family home prices back to March 2002 levels, while condo prices are back to July/August 2001 levels. That’s 9 years without any appreciation whatsoever. And who said a home was a great investment? (Answer: a bunch of real estate agents)
The graph below shows the historical trend back to January 1987 along with a trend line based upon the pre-bubble data for single family homes. As you can see, the single family price index has been well below the trend line for some time – currently 18.7% below.
December represents a 1.4% drop in single family home prices from November, which brings them down 30.1% from the bubble peak and down 7.4% in the last year. Condominium prices fell an additional 2% in December, down 27.2% from the peak and down 12.1% in the last year.
I have to admit that in the summer of 2009 I thought we had seen the bottom but I totally underestimated just how much lower sales activity could fall. The homebuyer tax credit gave the market a temporary boost but once it petered out sales fell off a cliff. Given how poorly the real estate market in Chicago has been lately we are probably in for another 3 or 4 months of these 1 – 2% price declines.