Chicago’s condo market is the weakest among five major MSAs

With the April 28th release of February 2011 data for the S&P/Case-Shiller Home Price Indices, we saw a significant fall in condo prices in the Chicago area.  The index reported an average condo price decline of 3.1% in February versus January.  The data look worse if you view the market over the prior six months or so.  The monthly declines in January 2011, and December, November and October 2010 were 5.4%, 2.0%, 1.6% and 2.5%, respectively.  Since July, the market is down about 18%, and posted an annual rate of -13.8% with the report on February’s data.

The S&P/Case-Shiller Home Price Indices cover five condo markets – Boston, Chicago, Los Angeles, New York and San Francisco.  The chart below compares the index levels for the five markets, rebased to 1995 = 100.  It is apparent that the Chicago market never saw the rate of price appreciation of the other four during the 2002-2006 run-up.  But what is also apparent is that over the past two years Chicago has seen the most significant retrenchment.  On average Chicago prices are back to their mid-2000 levels.  The other markets, while well below their 2006/2007 levels, have done a better job in holding on to their relative values.

S&P/Case-Shiller condo price indices for five major MSAs

Using 1995 = 100 as a benchmark, the New York condo market is about 163% above that level, meaning the average condo can still sell for more than 2 ½ times what it did in 1995.  Boston, Los Angeles and San Francisco are about 156%, 130% and 124% above their respective 1995 levels.  Chicago, however, is seeing average condo prices only 36% above their levels of 16 years ago.

S&P/Case-Shiller home and condo price indices for five major MSAs

Looking at home and condo price data, you can see that both markets are weaker in the Chicago area than the other four MSAs.  Chicago home prices posted an annual growth rate of -7.6% in February, more than double the decline of any of the other four.  As noted above, the condo market is down 13.8% versus February 2010.  The chart below illustrates the differences between New York and Chicago over the past 16 years.  In both markets – home and condos – it is clear that Chicago neither saw the price appreciation that New York did in the 10 years leading up to the market peak.  And once the markets turned in 2007, Chicago gave up almost all of its value, with home prices and condo prices only 13% and 7% above their 2000 levels, respectively, and only 39% and 36% above their 1995 levels, respectively.

S&P/Case-Shiller home and condo prices indices for Chicago & New York

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