Home prices here are rising faster each month than the month before, according to new data.
Single-family home values rose by 11.1 percent in the Chicago area in May compared to the same month a year ago, according to the the S&P CoreLogic Case-Shiller Indices released this morning.
That’s the biggest increase since December 2013, when Chicago-area home prices were up 11.2 percent from a year earlier, according to the index, and the continuation of a pattern where each month’s report from the index shows a bigger leap in Chicago prices than the last.
At this time last month, the index reported prices here were up 9.9 percent from a year earlier. The month before that it was nine percent, and so on back to the index for September 2020, when prices were up 4.7 percent from September 2019.
To be clear: The latest report from the index compares home prices to where they were in May 2020, during the chaotic early months of the pandemic. But home prices only slowed their roll in May 2020, they didn’t drop then or at any time during the crisis, according to the index.
That is, the growth reported in today’s data is real, not measured as the upward reach from a trough. The epochally tight inventory of homes for sale is contributing significantly to the price spike, according to Case-Shiller.
Even with double-digit growth in home prices, Chicago still trails all 19 other major cities covered by the index. Minneapolis was next-lowest after Chicago, with home price growth of 12.8 percent in May from a year ago.
Nationwide, home prices were up 16.8 percent, according to the index, and in three cities they rose at more than double the rate in Chicago. Prices were up 25.9 percent from a year ago in Phoenix, 24.7 percent in San Diego and 23.4 percent in Seattle.
The 16.8 percent increase nationwide “is the highest (nationwide) reading in more than 30 years of S&P CoreLogic Case-Shiller data,” Craig J. Lazzarra, managing director and global head of index investment strategy at S&P DJI, said in prepared comments accompanying the data. “A month ago, I described April’s performance as “truly extraordinary,” and this month I find myself running out of superlatives.”
Hefty price increases prompt the question of whether the current housing market is a bubble liable to burst.
“While sustained spurts of home price growth are keeping economic watchers on their toes,”
Selma Hepp, deputy chief economist at CoreLogic said in comments with the data, “underlying strength in consumer demand remains supported by a significant pool of accumulated savings and solid mortgage underwriting. Both are markedly different than the home price run-up” of the mid-2000s.
Fears of a housing bubble may be further allayed in Chicago by both the far slower rate of growth than some cities are seeing, and by this comparison: While home prices nationwide are now 38 percent above their peak before the mid-2000s housing crash, Chicago is still 2 percent below its September 2006 peak.