Condo prices hit new crisis lows in Chicago, Los Angeles and San Francisco

January 2012 data for the S&P/Case-Shiller Home Price Indices were released on Tuesday March 27th, with monthly declines in condo prices in all five of the metro areas covered by our indices – Boston, Chicago, Los Angeles, New York and San Francisco. All five cities have shown falling condo prices for at least four consecutive months.

The Chicago index reported the largest decline, down 2.6%, in January versus December 2011. The San Francisco index was next, falling by 1.5%. Condo prices in Boston, Los Angeles and New York fell by 0.2%, 0.6% and 0.4% in January, respectively.

With January’s report, Chicago posted the largest annual decline,
-9.7%, with most of the weakness coming in the last five months. Chicago condo prices have fallen each month in September through January by a cumulative 14.1%. In addition, Chicago posted a new low in January 2012. With an index level of 100.09, average condo prices in Chicago are back to their January 2000 levels, virtually erasing 12 years of any appreciation in value.

Los Angeles condo prices have fallen 18 consecutive months, were down 7.5% at an annual rate and also hit a new crisis low in January 2012. San Francisco’s condo market have fallen nine consecutive months and also posted a new crisis low in January. Average condo prices in San Francisco are down 6.9% versus January 2011. Boston showed an annual decline of 1.7%; but the New York market turned the corner as we entered 2012 and is up 0.3% versus January 2011.

The chart below compares the index levels for the five condo markets covered by the indices, rebased to 1995 = 100. The grey, blue and red lines represent Chicago, Los Angeles and San Francisco, respectively. Chicago is well below the other cities, showing that average condo prices are back to their January 2000 levels. On average Los Angeles condo market prices are back to their mid-2003 levels; while San Francisco prices are back to early-2002 levels.

S&P/Case-Shiller Condo Price Indices. Sources: S&P Indices and Fiserv

The New York condo market remains the most stable, as the table below highlights. While only modestly, New York condo prices are increasing at an annual pace. Chicago is the weakest across both housing and condo markets, but Los Angeles and San Francisco are not far behind.

S&P/Case-Shiller Home and Condo Price Indices, comparative statistics

The chart below illustrates the differences between Chicago and New York condo and single-family homes since 1995. The green line shows the New York condo market is the best relative performer during the housing crisis. New York condo prices are still up over 160% versus January 1995, whereas Chicago prices are up only about 26% (and as discussed above are back to their January 2000 values). The New York condo market has been fairly stable over the past three years, as seen by the more-or-less sideways movement of the green line since 2009; whereas the Chicago market continues to weaken. Condo prices in Chicago have fallen by 37.8% since their September 2007 peak; whereas the New York market has fallen by less than half that rates (-16.0%) from its February 2006 peak.

S&P/Case-Shiller Home and Condo Price Indices. Sources: S&P Indices and Fiserv

The chart below shows the differences between New York, Los Angeles and San Francisco since 2000. The green, grey and orange lines show that the New York condo market has been fairly stable over the past three years, while the California markets have weakened. The LA condo market has fallen by 42.3% since its July 2006 peak; the San Francisco market has fallen by 37.9% since its October 2005 peak; but, as said above, the New York market has only fallen by 16.0% from its February 2006 peak. Across all cities, however, both the single-family home and condos prices fell as we began 2012. None of these markets are showing any signs of a sustained recovery.

S&P/Case-Shiller Home and Condo Price Indices. Sources: S&P Indices and Fiserv

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2 Comments

  1. Jason says:

    Interesting article. I live near Chicago, why is Chicago the worst in appreciation value? Is it because of an influx of new building and apartment conversions to condo units? Or is it more of a combination of factors not mentioned? Thanks.

    • Maureen Maitland says:

      Hi Jason, Since our methodology is driven by repeat sales (ie — it must be a condo and sell as a condo twice) I am not sure that the conversion of apartments to condos is the reason. It is likely more due to a combination of factors including overbuilding, high relative supply, the general state of the Mid West economy, and consumer confidence. About six months ago the Califonia markets were looking as bad, so there is and will always be some shifting in rank among the cities depending on the relative state of each of these factors. Thanks for your comment. Maureen

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