S&P Dow Jones released the February CoreLogic Case Shiller Home Price Indices this morning which show that the nation’s single family home prices rose 12.0% over the previous year, compared to 11.2% for the 12 months ending in January. That was the highest year over year appreciation rate in 15 years.

Alas, the Chicago area once again trailed the other 19 major metro areas tracked by Case Shiller with a mere 8.6% annual appreciation rate for single family homes. Now, it turns out that 8.6% is the highest appreciation that the Chicago area has had in not quite 7 years, which is good, but it’s not 15 years. And, if you were paying attention last month you would have noticed that I told you then that we registered an 8.9% appreciation rate so you’d be asking me how 8.6% is a 7 year high. Well, it turns out that the Case Shiller folks regularly revise the old indices and the revised data now has January with only an 8.5% growth rate. So January was not as strong as originally reported.

Chicago area condo prices have been losing a bit of steam over the last few months. February, with a mere 3.1% annual appreciation rate, was the third month in a row where appreciation fell from the previous month.

I’ve graphed all the year over year appreciation rates for the Chicago area for both condos and single family homes in the graph below.

Chicago area single family home prices have shown annual gains for 100 consecutive months

Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI, provided some perspective on the price changes:

More than 30 years of S&P CoreLogic Case-Shiller data help us to put February’s results into historical context. The National Composite’s 12.0% gain is the highest recorded since February 2006, exactly 15 years ago, and lies comfortably in the top decile of historical performance. Housing’s strength is reflected across all 20 cities; February’s price gains in every city are above that city’s median level, and rank in the top quartile of all reports in 18 cities.

These data remain 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.

Case Shiller Chicago Area Home Price Index By Month

The graph below shows the actual Case Shiller index values for the Chicago area for both condos and single family homes going back to 1987 along with a red trend line that reflects the pre-bubble rate of price appreciation for single family homes. February single family home prices actually rose by 0.3% from January while condo prices fell 0.8%. Since single family home prices have been doing better than condo prices recently the single family indices have actually crossed above the condo indices in the last couple of months for the first time in more than 6 years.

As you can see, despite the recent energy exhibited by home prices we still haven’t caught up to the bubble peak. Single family home prices are still 8.2% below that level and condo prices are short by 5.8%. In addition, the gap between single family home prices and that red trend line has been widening for years and really hasn’t closed that much lately. We currently fall short by 26.2%.

Unfortunately, the average person that bought a single family home in the Chicago area between May 2005 and February 2008 is still underwater as is the average person who bought a condo between August 2005 and October 2008.

Of course we’ve made a lot of progress from when the market bottomed out. Single family home prices have bounced back 50.6% while condo prices have recovered 55.9%.

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.