Case Shiller just released their August home price data for Chicago and, after falling to a 10 year low in April, Chicago single family home prices have now rebounded 4 months in a row, rising a total of 8.4% – 1.4% from July. Condominium prices have risen 5 months in a row – a total recovery of 12.6% and .6% in the last month. Is it possible that prices have finally bottomed? Check out the graph below. We’ve been head faked twice before. Is it happening again? Of course, the last time we bounced off a bottom we were further from the trendline than ever before. Even now we are almost 20% below where I’d expect us to be. That gap has continued to widen during the entire deflation of this bubble. But we are heading into the slow selling season and there is a really good chance that the US will dive into another recession. Yet, if we get another couple of months like this, I will once again declare a bottom. Let’s not forget that at some point inflation has to bail the housing market out.
If you were unlucky enough to have bought at the bubble peak you would have lost a total of 29.2% on your single family or a total of 28.2% on a condo. Single family home prices are basically flat from April/May 2002 and condo prices are flat from June 2001. That’s a pretty painful experience for the average Chicago homeowner.
On a year over year basis single family homes have dropped 5.8% and condo prices have dropped 9.6%.
The Case Shiller press release actually highlighted conditions in the Midwest, specifically mentioning Chicago:
The Midwest is one region that really stands out in terms of recent relative strength. Chicago, Detroit and Minneapolis have all posted very sharp monthly increases going back to May. These markets were some of the weakest during the crisis, particularly Detroit.