As I mentioned a while ago, thanks to someone on Cribchatter I recently discovered an old paper written by Karl Case and Robert Shiller (as in Case Shiller home price index) which contained their index of Chicago area home prices going back to early 1970. I was able to splice that time series together with the currently reported index values with some data manipulation:
- There was a one year gap between this older series and the new one which I patched using similarly constructed home price data from the Federal Reserve of St. Louis.
- The older data was only available quarterly so I extrapolated between quarters to estimate monthly data points.
- I reindexed the older data to be consistent with the newer data
Here is the new time series using the combined data.
I don’t know that there is a lot of value in using this longer time series on an ongoing basis but it is interesting. As you can see from the graph there have been 3 different times in the past when home price growth accelerated. The first two of those very roughly corresponded to periods of higher inflation but the relationship was by no means exact. The third was during the housing bubble.
Also, if we look at the 29 year period from early 1970 to December 1998 (just before the housing bubble took off) we see that Chicago area home prices rose at an annual compounded rate of 6.1% per year. Of course we did have a few extended periods of higher inflation back in those years but that appreciation exceeded normal inflation. That also substantially contrasts with a current annual appreciation rate in Chicago of about 3.0% per year while the nation’s home prices are rising at more than 6% per year. I just keep wondering if the Chicago area will ever see 6% home price appreciation again in the near future.
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.