How Low Can Chicago Home Prices Go?

June 28, 2011

Home values in April rose for the first time in eight months across the country, though not in the Chicago real estate market.

The Standard & Poor’s/Case-Shiller home price index, which hit record lows in March, recorded home-price increases for April in 13 of the 20 cities the index tracks.

Unfortunately, prices on single-family homes in the Chicago area hit new recession lows for the sixth straight month.

home with a reduced price outsideThe numbers aren’t that dire: The Chicago index fell only a mere 0.4 percent from March to April. The problem is that it’s the eighth straight monthly drop. And, while Chicago condo prices actually increased 2.5 percent in April, on a year-over-year basis, home prices are down 8.6 percent while condo values are almost 16 percent lower.

Metro Chicago real estate prices are basically hovering around levels we haven’t seen since 2001.

Nationally, home values are equivalent to where they were back in 2003.

“In a welcome shift from recent months, this month is better than last — April’s numbers beat March,” said David M. Blitzer, Chairman of the Index Committee at S&P Indices. “However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season. It is much too early to tell if this is a turning point or simply due to some warmer weather.”

Blitzer reported a mixed bag of U.S. housing news:

*Single-family housing starts were up in May but still close to their 30-year low.

*Existing-home sales were also up in May but are about 35 percent below their pace in 2005.

*Foreclosures have declined but remain a large factor across the country.

*Interest rates remain low, but tight lending standards are making it harder to qualify for a mortgage.

For now, at least most of the country can celebrate a rise in home values.

“In the monthly details, we saw home prices increase in April over March. The 10-City was up 0.8% and the 20-City rose 0.7%. Only seven cities experienced lower prices compared to 18 in March,” said Blitzer.

“For a real recovery we would need to see several months of increasing home prices, large enough to shift the annual momentum to the positive side. In short, better news, but still a lot of questions and a long way to go.”

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