I don’t think so – at least not in Chicago.

CNN Money came out with a story today about a Fiserv forecast that home prices will fall another 11.3% nationally by June 2010. Fiserv is a financial information and analysis firm that tracks the housing market among other things.

Having personally declared a bottom to the Chicago housing price decline, I thought I would point out a few things about this forecast:

• It’s a national forecast. Their forecast for Chicago is only for a 4.1% decline over the next 12 months.
• A 4.1% decline is pretty small. That’s within the range of error for these types of forecasts and it might never actually materialize.
• Their forecast is for median prices, which are heavily affected by the mix of houses sold. During this crisis there has been a shift in the mix to lower priced houses and, although that drags the median down, that is independent from price declines of individual houses.

I’m sticking to my original assertion: Chicago home prices have bottomed and there is actually an upward trend now.

As you know, I don’t sugar coat the real estate news so here it is. The housing market in Chicago is still on the decline. We’ve had a couple of different statistics released in the last 2 days that show that both home prices and sales volumes are continuing to decline.

• The Case Shiller index for December came out yesterday
  • Home prices are back to December 2003 levels
  • Prices are down 14.3% in the last year
  • Prices are down 18.6% from the peak
• The Illinois Association of Realtors released their sales statistics for January and it shows that home sales are down 24.4% from 2008, which was down from 2007, which was down from 2006.

You can always find these and other statistics along with charts on our Chicago Real Estate Statistics page.

Over the last week a number of Chicago area real estate statistics came in that reinforce the fact that the market here continues to deteriorate like other parts of the country. Here is a brief summary:

• 4th quarter sales for the city of Chicago declined by 29% from 2007, dropping to 1994/1995 levels. The drop was most significant for condo sales.
• December sales for the Chicago PMSA (primary metropolitan statistical area) came in 16% below December of 2007, which was already 33% below 2006. The decline has slowed somewhat in the last few months.
• The Case Shiller index that tracks home prices (much more accurately than the median prices reported by the real estate organizations and the media) shows that prices in November were down 12.5% from the previous year, are down a total of 16% from the peak, and are back to May 2004 levels.

In light of all this The Chicago Tribune ran a story today about how sellers are finally capitulating and dropping their sales prices.

It’s not easy figuring out what is going on with home prices in Chicago’s individual neighborhoods. The Case-Shiller data, which I believe provides the best insights into home price trends, is not typically available at the neighborhood level and, as I have often pointed out, I think median price data is worthless. Therefore, on an ongoing basis we track months of home inventory and days on the market as proxies for what is going on. The belief is that if inventory and days on the market are rising prices are soon to fall.

Unfortunately, the only way to really tell what is going on is to painstakingly examine individual sales and see if the price trend is up or down. I’ve been meaning to do this for a while but in response to a recent debate on Cribchatter I decided to get off my butt and actually do the analysis. I looked at condo sales in Lincoln Park over the last 30 days, where the previous sale had occurred in the last 6 years. I picked Lincoln Park because there has been some evidence that Lincoln Park has been immune to the home price declines and I looked at condos because there are more of those sold than single family homes. Also single family homes in Lincoln Park are more likely to have been renovated from the previous sale.

Well, here’s what I found:

Lower sale prices are highlighted in red and the data is sorted by the date of the previous sale in order to highlight the pattern. Basically we are seeing price declines in the last 3 years, which is similar to what we are seeing in the Case-Shiller numbers for Chicago as a whole. I guess Lincoln Park is not immune after all.

A report published by the Chicago Tribune on Sunday based upon data provide by Zip Realty is totally bogus. In the report titled Near South Side homes selling, on average, for more than list price the Tribune states that “sales in the Near South Side have averaged 106.4 percent of their asking prices, amounting to $579,630.”

But we know this can’t be true because the home inventory situation in the Near South Side is abysmal. So I went into the MLS to check out the underlying data myself. While the basic statement is technically correct, the data doesn’t at all mean what you think it does. In fact, the data is full of garbage and you know what they say about data: garbage in, garbage out. You see the problem is that the home sales data in Chicago’s Near South Side for this time period includes lots of Museum Park’s new development sales – in particular, sales at 1211 S. Prairie. When you look at the details of those transactions in the MLS you see examples like unit 5002 which closed October 29 at $962,970 while it was listed at $850,500. I think we can all agree that whoever bought this unit probably did not beg the developer to let them pay more than the list price. What really happened is that the final selling price includes lots of upgrades and a parking space that costs an extra $35,000. So a preponderance of these listings is skewing the data.

This is a great example of what happens when you have a computer churn through massive quantities of data without any human review. You get mathematically correct numbers that don’t really mean anything.