Case Shiller: Chicago Only Metro With Single Digit Home Price Appreciation

Case Shiller: Chicago Only Metro With Single Digit Home Price Appreciation
9% home price gains can be a downer when the
rest of the nation is growing at 13.2%

Let’s say you’ve been planning on leaving the Chicago area for another city. Well, yesterday’s release of the March CoreLogic Case Shiller home price indices by S&P Dow Jones says you’re basically screwed. Actually, it’s been saying that for a while but yesterday’s release really rubs your nose in the fact that the cost of the home you will be buying has been rising way faster than the value of the home you currently own in the Chicago area. That means you’re going to end up putting more cash into your next home than you would have if Chicago had been keeping up with the rest of the nation.

The nation’s single family home prices rose 13.2% in the last year while the Chicago area rose only 9.0%. And for perspective, second to last place Las Vegas rose 10.6%. In first place, Phoenix rose 20%!

Nevertheless, I should point out that 9% is the highest annual single family home price appreciation that we’ve seen in almost 7 years as you can see in the graph below. Condo prices on the other hand only rose 2.3%, which is the lowest growth rate in 8 months and the 4th month in a row with a decline. As we know the inventory of single family homes has been extremely low in the Chicago area while condo inventory has been much more plentiful.

Case Shiller Chicago Year Over Year

Chicago area single family home prices have shown annual gains for 101 consecutive months

Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI, explained how significant the March data was and also discussed what’s driving the market:

More than 30 years of S&P CoreLogic Case-Shiller data put these results into historical context. The National Composite’s 13.2% gain was last exceeded more than 15 years ago in December 2005, and lies very comfortably in the top decile of historical performance. The unusual strength is reflected across all 20 cities; March’s price gains in every city are above that city’s median level, and rank in the top quartile of all reports in 19 cities.

These data are consistent with the hypothesis that COVID has encouraged potential buyers to move from urban apartments to suburban homes. This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question.

Case Shiller Chicago Area Home Price Index By Month

Single family home prices in the Chicago area rose by 1.9% from February while condo prices rose 1.1%. The monthly indices are graphed below going back to 1987 along with a red trend line which I created based upon the pre-bubble price levels. Since single family home prices have recently been outperforming condo prices the two lines recently crossed once again.

As if I didn’t already give you enough reason to be depressed about Chicago area home prices consider the following. Single family home prices in the area are still 6.6% below the bubble peak with condos 4.6% below their peak. However, the nation’s single family home prices are now 32% above the peak. That’s a similar story that you get by comparing single family home prices to the red trend line. We’re lagging that benchmark by 25.1%.

Another way of benchmarking today’s prices against the housing bubble is to note that the current price level for single family homes is still below where it was from July 2005 – January 2008. Condo prices are below the September 2005 – August 2008 period.

On the flip side single family home prices have bounced back from the bottom by 53.3% and condo prices have gained 57.8%

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.

Enter your email address:Delivered by FeedBurner

Leave a comment