Case-Shiller: Chicago Home Prices Hit Another New Post-Peak Low

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – February data is released in April).

Here are the basic Case-Shiller stats for the Chicago area* as of February:

February 2011
Month to Month: Down 2.2%
Year to Year: Down 7.6%
Prices at this level in: May 2001
Peak month: September 2006
Change from Peak: Down 32.8% in 53 months
Low Tier: Under $161,077
Mid Tier: $161,077 to $271,783
Hi Tier: Over $271,783

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between January and February (the same as December to January). Detroit of all places was the only city that saw a month-to-month gain (up 1.0%).

Here’s a look at the latest local tiered data, back through 2000:


And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:


All three of Chicago’s price tiers got smacked down in February, but the low tier took the biggest hit by far. Month to month, the low tier was down 4.7%, the middle tier fell 2.8%, and the high tier decreased 1.5%.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:


Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.


Ten of the twenty cities tracked by Case-Shiller hit another new post-peak low as of February. The 20-city composite index sits just barely above its April 2009 post-peak low (139.27 in February vs. 139.26 in April 2009).

Methodology: The Case-Shiller index tracks price changes in sets of homes of similar size and style to better determine changes in what people are willing to pay for the same home over time. If data is available from an earlier transaction for the same home, the two sales are paired and treated as a “repeat sale.” Repeat sales that are too far apart, sales between family members, lot splits, remodels, and property type changes (e.g. from single-family to condos) are excluded from the calculations. All remaining repeat sales are totaled together and weighted based on the time between each sale, then the data for the most recent three months is averaged together to create a given month’s index value (i.e. – September’s index represents the average of the data from July through September).

The three price tiers plotted in the charts below simply represent the top, middle, and bottom third of all sales, based on the initial sale price. In other words, if there were 3,000 sales in the three-month period, 1,000 of them would be in the low tier, 1,000 in the middle tier, and 1,000 in the high tier, by definition.

*[Case-Shiller defines Chicago as the entire Chicago-Naperville-Joliet, IL Metropolitan Division, which includes all of the following counties: Cook IL, DeKalb IL, Du Page IL, Grundy IL, Kane IL, Kendal IL, McHenry IL, and Will IL.]


    Staggering data! Its a great time to buy. Rough for sellers!Staggering data! Its a great time to buy. Rough for sellers!

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  • Jeremy McMillan

    Case Shiller tracks only sales, not asking prices, or bids, and therefore represents yesterday's market. If you want to understand where the prices are going in a falling market, you need to understand fundamental price supports: the factors that bring buyers at certain price points. They are like price insurance in a falling market.

    One way to estimate this is by assuming zero to slightly negative cost of ownership and calculating the price at which an investor could buy the property and rent it out with a profit that covers his management time and effort. As a buyer, you can imagine yourself as both a landlord and a tenant with separate accounting. High cost of ownership means your renter persona wins and your landlord persona loses money. The break-even is somewhere between $700-800/mo. rent for every $100,000 in purchase price.

    Try this calculator.

  • Msliwicki

    It is the nature of real estate as an illiquid asset – there is no daily market index that gives 'today's prices' as in the equity markets – that yields tracking 'yesteday's prices' as the primary gauge of current prices. Furthermore it is an inefficient market, unlike the stock market (efficient market hypothesis), with imperfect and incomplete information available for a given, unique sales transaction.  Case-Shiller is the best methodology available that I have seen, in particular as it tracks the sale of the same unit over time.  Look at Chicago condo market – where first-time sellers repeatedly, repeatedly list their units at too high of asking prices and you see several price cuts until that price is reached that generates a flow of multiple showings leading to an eventual sale.  I wouldn't want to rely on tracking asking prices by any means.

    • Jeremy McMillan

      Efficient Markets Hypothesis (EMH) was disproven by the Hurwicz, Maskin, Myerson paper “The Design of Economic Institutions” which won the 2007 Nobel Prize in Economics.

      It's simpler than you explain. Asking any price is public, but never binding. Bidding any price is secret and always binding. Buyers never know anything about the market except what's filtered through agents with conflicts of interest. NAR rigs the game.