Chicago in Yellow

The S&P/Case-Shiller Index of prices in 20 U.S. cities dropped 18.5% in 2008, according to Standard & Poor?s, the New York-based ratings agency that compiles the index. Nationally, single-family home prices are at levels not seen since the third quarter of 2003 , says Crain’s Real Estate Daily.?There are very few, if any, pockets of turnaround that one can see in the data,? David Blitzer, chairman of the index committee at S&P, said in a  recent release. ?Most of the nation appears  to remain  on a downward path, with all of the 20 metro areas reporting annual declines, and eight of those (areas) now with negative rates exceeding 20%.?   David’s speaking in annual terms.  There are a lot of numbers flying around out there, so I want to clarify this is a discussion of percentages in annual terms compared to 2008.

The S&P is reporting that home prices in Chicago are at the same level as Decemeber 2003.  They peaked in September 2006, but have declined a whopping 18.6%, bringing us to the current market we are in.  In searching through comparables on the MLS, this is noticeably accurate.  It’s a hard pill to swallow, but with such exponential growth over that last four to five years, I feel it is to be expected.  18% growth in a year (what happened in 2006) is unheard of!  3-4% growth is what economists go by for average annual growth in the housing market.  I feel that we will be back to this 3-4% annual growth and should strive to protect this proven and stated increase.  Why continue to use the same practices that have gotten us in to trouble in the past….it’s time for a smarter approach and responsible behavior by all: real estate agents, homeowners, buyers, mortgage brokers, Wall Street, government, and the list goes on and on.

Composite average, 20 cities  -18.5%

The bright part of the report, I thought, was to hear that the Chicago area drop of 14.3% last year was less than 10 other major U.S. metro areas.  Let’s take a quick look at how all 20 cities fared compared to last year:

1. Phoenix    – 34 0%
2. Las Vegas   -33.0%
3. San Francisco  -31.2%
4. Miami  -28.8%
5. Los Angeles  -26.4%
6. San Diego  -24.8%
7. Tampa  -22.0%
8. Detroit  -21.7%
9. Washington  -19.2%
10. Minneapolis  -18.4%
11. Chicago   -14.3%
12. Seattle -13.4%
13. Portland -13.1%
14. Atlanta   -12.1%
15. New York -9.2%
16. Charlotte  – 7.2%
17. Boston  -7.0%
18. Cleveland  -6.1%
19. Dallas   -4.3%
20. Denver   -4%

For condo comparisons, the S&P only compiles an index of condominium prices for the Chicago area, which fell 7.3% last year. They do not compile a national condo price index however.  By comparison, condo prices fell 22.6% in Los Angeles, 19.8% in San Francisco, 6.1% in Boston and 4.4% in New York City.

Here’s the technical jargon for clarity sake: The S&P/Case-Shiller tracks prices by examining repeat sales of the same properties and extrapolating to the broader market.

I am extremely hopeful in President Obama’s stimulus plan….BUT, we all have to do our part to get the machine moving again – responsibly and smartly.

Photo by Scott Robinson