The March Case Shiller home price index just came out from Dow Jones S&P CoreLogic and, while it’s still great news for the nation’s home prices, it’s kind of sad for the Chicago area. Compared to last year the nation’s single family home prices rose 6.5% while the 20 metro area composite rose 6.8% with 3 cities registering double digit gains. However, by comparison the Case Shiller Chicago index was only up 2.8%, which put the Chicago area in last place among the 20 metro areas, behind Washington DC which gained 3.0%.
The graph below shows the year over year home price gains for both single family homes and condos in the Chicago area going back to 1988. Note that March was the 65th consecutive month of annual gains, following that dark period we would all like to forget about. Also note that condo prices were up by 3.6%, which unfortunately is the lowest annual gain in 18 months.
In commenting on the March data David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, even remarked about Chicago’s status at the bottom of the list:
Any doubts that real, or inflation-adjusted, home prices are climbing rapidly are eliminated by considering Chicago; the city reported the lowest 12-month gain among all cities in the index of 2.8%, almost a percentage point ahead of the inflation rate.
Looking across various national statistics on sales of new or existing homes, permits for new construction, and financing terms, two figures that stand out are rapidly rising home prices and low inventories of existing homes for sale. Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust. Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising. Compared to the price gains of the last boom in the early 2000s, things are calmer today. Gains in the National Index peaked at 14.5% in September 2005, more quickly than Seattle is rising now.
The thing is that those low inventory conditions that he ties to the price rises also exist in the Chicago area. Yet we aren’t experiencing the same level of home price appreciation as those other metro areas. Clearly something is holding us back and we can only wonder if it’s the city/state’s fiscal crisis.
Case Shiller Chicago Area Home Price Index By Month
The graph below plots the actual Chicago area home price indices for single family homes and condos going back to 1987 along with a red trend line that I created based upon the pre-bubble period. Although you can’t tell from the graph single family home prices rose 1.1% from February while condo prices rose 1.3%.
What you can tell from the graph is that we are still significantly below peak bubble prices. Single family homes are 16.9% below their peak while condos are 9.4% below – unlike the nation’s home prices which are now 7.8% above their bubble peak. And the picture is even worse when compared to that trend line. Single family homes fall short of that target by 25.7%.
Nevertheless, the recovery from bottom has been substantial with single family home prices bouncing back 36.4% and condo prices bouncing back 50.0%. But that still leaves single family home prices below where they were during the entire period from April 2004 – November 2008 and condo prices below their range from March 2005 – December 2008.
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service discount real estate brokerage. 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.