Case-Shiller: October Area Prices Down 6%

Revised from previous post

For October 2008, the average sales price for 2,200 re-sale condos in the Chicago metro area was down 6% from its all-time October high in 2007 and 2006. And, for the past ten years, the average annual appreciation rate for existing condos in the Chicago area was 6%.

Those findings come from the most recent condo report issued by Standard & Poor's/Case-Shiller, one of the most-respected and most-followed U.S. housing indices. Until recently, condos were excluded from Case-Shiller's monthly housing reports, which receive significant media coverage.

Among the five Metropolitan Statistical Areas (MSAs) monitored for condo sales is Chicago-Naperville-Joliet (representing eight counties: Cook, DeKalb, DuPage, Grundy, Kane, Kendall, McHenry and Will).

So now, thanks to S&P, we have access to monthly data going back to January 1995. We'll be reporting on these statistics in future blog posts. With appropriate credit and a link to this blog, you may display these posts on your own blog or Web site.

For October 2008, the Chicago condo index was 151. (It was 100 on January 2000.) That compares to 160 for October 2007, which means a year-over-year decline in sales price for re-sale condos of 6%. (UPDATE: For December 2008, the index was at 146, down another 2%.) The numbers and percentage change from the previous year, each October, are as follows:

1998: 92 (+7%)
1999: 98 (+7%)
2000: 109 (+11%)
2001: 120 (+10%)
2002: 127 (+6%)
2003: 135 (+6%)
2004: 143 (+6%)
2005: 154 (+8%)
2006: 160 (+4%)
2007: 160 (+0%)
2008: 151 (-6%)

In the decade from 1998 to 2008, the increase in sales price was 64 percent (151 minus 92 divided by 92), for an average annual appreciation rate of 6.4 percent.

Compared to Chicago's year-over-year October decrease of 6%, New York was down 3%, Boston down 4%, San Francisco down 17% and Los Angeles down 21%.

For a spreadsheet with the 1995-2008 statistics for all five metro areas, e-mail your request to Ric14@ChicagoCondosOnline.com.

Notes from an S&P representative: The number of Chicago-area condos included in the most recent survey was 2,217. The index is calculated with the repeat sales method, which uses data on condos that have sold at least twice, in order to capture the true appreciated value of constant-quality condos.

To calculate the index, data are collected on transactions of all condos (including condo townhomes) during the month. The main variable is the price change between two arms-length sales of the same condo. Price data are gathered after that information becomes publicly available at county recording offices.

Data are collected on sales of specific condos. Each sale price is considered a data point. When a specific condo is resold, months or years later, the new sale price is matched to the first price, creating a sale pair. The difference in the value of this sale pair is measured and recorded.

The sale is screened to exclude transactions (a sale between family members, for example) that would make the index not representative of the market. The screened sale pairs are then weighted to control for atypical changes in particular condos. All qualified, weighted sale pairs in the MSA are aggregated into the corresponding MSA’s index.

For a complete description of the methodology, visit homeprice.standardandpoors.com.