Nationally home prices slip. Chicago prices still climbing

The headlines on the front page of the business sections report the first decline in home prices in 13 years. Home prices dipped 0.4 percent neationwide in teh July to September period, compared to the previous quarter, the Office of Federal Houseing Enterprise Oversight said.

Interestingly, compared with the third quarter of 2006, prices rose 1.8 percent, but this is the smallest year-to-year increase in 12 years.

To get a local perspective, we drilled down into the data for a couple Chicago neighborhoods as well as the city as a whole.

In Lincoln Park, you can see that prices have risen 42% since October, 2005. Comparing October, 2006 to October, 2007, prices are up 11%. Figures are for closed properties, all property types, both re-sale and new construction, from MLSNI figures.

In Lakeview, the two year trend is upward with prices up 13 percent. Comparing October, 2006 to October, 2007, however, it is interesting to note that prices declined from $383,000 to $334,000. The data shows that October, 2006, was the peak month for prices in the two year period.

This caught me by surprise as most properties, even in Lakeview, are still experiencing appreciation. Digging through the closings that occurred in October, 2006, were two massive properties near the lakefront. One closed for $2-million and the other for $2.45-million. These were large estates - the likes of which rarely change hands in close-in neighborhoods like Lakeview and likely were sold as development parcels. Close examination of the remaining house sales and condo/townhome sales did not reveal any out-of-the-ordinary events. The data for 2-3-4 flats showed a decline from $839,000 to $664,000 - but in the neighborhood, only two closings occurred in October, 2007, and three in October, 2006. Land prices also dropped, but, again, hardly any parcels closed in October of each year compared to the hundreds of condominiums in each of the months.

Pay close attention to condo & townhome prices as there appears to be a bit of softness in this market at the present time.

Citywide, the trend is clearly upward. October, 2007, however, recorded prices lower than the two months before as well as a miniscule decline from October, 2006. This appears to be due to a slowdown in all real estate activity during the late summer and early fall months when media reporting of the real estate downturn brought much business to a standstill. The number of properties sold in October, 2006, was 3,040 compared to 2,246 in October, 2007 - a 26% drop.

Also today is a report that the economy's growth is the best seen in four years for the period July through September, 2007. It should be very interesting to see if the strong economy can lift up the real estate market, or, rather, if real estate will bring down the economy. Stay tuned...