Case Shiller: Chicago Home Prices Rise At Fastest Rate In 6 1/2 Years

Case Shiller: Chicago Home Prices Rise At Fastest Rate In 6 1/2 Years
Despite growing at the fastest rate in 6 1/2 years,
Chicago home prices still lag the nation

The November CoreLogic Case Shiller home price indices, released by S&P Dow Jones this morning, were pretty impressive. As everyone has been noting home prices are really skyrocketing across the nation. The Chicago area has also seen some pretty solid growth in home prices but is still lagging the rest of the country.

For the nation as a whole single family home prices appreciated by 9.5% from November 2019. And I thought 8.4% for October was stellar. By comparison the Case Shiller Chicago area index indicated a 7.5% gain in home prices, which is the highest rate of appreciation in 6 1/2 years. But that still places us 3rd from last place among 20 metro areas tracked by CoreLogic. So now Dallas and Las Vegas are behind us but those are two markets that have done exceptionally well over the last few years.

Chicago area condo prices are also advancing nicely with a 5.6% increase over the previous year which is the highest rate of appreciation in just under 6 years. This is impressive, given the stories of condos being out of favor right now.

I have the historic year over year appreciation for both single family homes and condos plotted below. You can easily see how dramatically home prices jumped up last year.

Case Shiller Chicago Year Over Year

Chicago area single family home prices have shown annual gains for 97 consecutive months

Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices, reflected on the peculiar state of affairs we find ourselves in:

As COVID-related restrictions began to grip the economy last spring, their effect on housing prices was unclear. Price growth decelerated in May and June before beginning a steady climb upward. November’s report continues that acceleration in a particularly impressive manner. The National Composite last matched this month’s 9.5% growth rate in February 2014, more than six and a half years ago. From the perspective of more than 30 years of S&P CoreLogic Case-Shiller data, November’s 9.5% year-over-year change ranks near the top decile of all monthly reports.

Recent data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes. This may represent a true secular shift in housing demand, or may simply represent an acceleration of moves that would have taken place over the next several years anyway.

Case Shiller Chicago Area Home Price Index By Month

The graph below shows the available history of the Chicago area home price indices along with a red trend line based on the rate of appreciation before the housing bubble happened. From October to November single family home prices rose by 0.4% while condo prices dropped by 0.1%. Normally at this time of the year prices fall but the strength of the market neutralized that seasonal effect.

A few things are readily apparent from the graph. For instance, we still haven’t fully recovered back to the bubble peak. In fact, Chicago is one of the few metro areas that hasn’t. In fact, we look so bad relative to most other areas that I’m going to have to do a follow up post showing just how sad it is. But suffice it to say that single family home prices are still 8.4% below the peak while condo prices are now 2.5% below the peak. That also means that single family home prices are still below the levels from May 2005 – February 2008 and condo prices are lower than the levels from April 2006 – December 2007.

But I’m not sure that hitting the prior peak should be the ultimate benchmark. If Chicago area single family home prices had continued to appreciate like they had prior to the bubble they would be following that red trend line. Instead, they have been falling farther and farther behind. Right now they are 25.7% below that line.

That’s not to say that we haven’t made tremendous progress from the bottom. Single family home prices are up 50.3% and condo prices are up 61.3% from those dark days.

Case Shiller Chicago

The Chicago real estate market still has a long way to go before catching up to bubble peak prices.

#ChicagoHomePrices #CaseShiller #HomePrices

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 or get an insider’s view of the seamy underbelly of the real estate industry 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.

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