This update of the Institute for Housing Studies (IHS) Cook County House Price Index highlights changing prices for single-family homes through the fourth quarter of 2017 in 16 City of Chicago submarkets and 17 submarkets primarily in suburban Cook County. A detailed discussion of the Index is below. To view a full page interactive graph with a map and data for all submarkets go here. Underlying price index data can be found here.
Key Findings
Year-over-year price changes
- Areas with the largest increases in prices between the fourth quarters of 2016 and 2017 include Chicago submarkets West Town/Near West Side (7.9 percent increase) and Humboldt Park/Garfield Park (7.4 percent increase). In suburban Cook County, the largest annual increases were seen in northwest suburban Hoffman Estates/Streamwood (7.3 percent increase).
- Four areas experienced year-over-year price declines. All four are higher-value, generally stable submarkets, including Winnetka/Northbrook (-2.6 percent) in north suburban Cook County and Lincoln Square/North Center (-1.4 percent), Lincoln Park/Lakeview (-0.8 percent), and Uptown/Rogers Park (-0.3 percent) on Chicago's north side.
- On average, house prices in Cook County increased by 2.7 percent compared to the previous year. In the City of Chicago, prices increased by 2.8 percent, and in suburban Cook County prices increased by 2.7 percent.
- The map below highlights the pattern of submarkets that have seen the largest and smallest year-over-year price increases. It shows that areas with the biggest annual price increases are on the west and south sides of the city. The smallest increases are seen in high-value north side Chicago neighborhoods and in Winnetka/Northbrook. Click on each submarket area to get additional data on house price trends. To view a full page, interactive map, click here.
Peak to current
- As of the fourth quarter of 2017, 29 of 33 submarkets in Cook County remain below peak price levels experienced during the height of the housing bubble. The four areas that have exceeded those previous peak levels are West Town/Near West Side (18.8 percent above bubble-era peak), Logan Square/Avondale (10.8 percent), Lincoln Square/North Center (4.7 percent), and Lake View/Lincoln Park (2.2 percent).
- Despite recent price improvements, Englewood/Greater Grand Crossing continues to be the submarket furthest from its bubble-era peak with prices in the fourth quarter of 2017 at 53.9 percent lower than they were at the top of its market in fourth quarter 2007.
- Compared to the peak of the market, prices in Cook County are still off by 22.7 percent. Prices in the City of Chicago are 23.3 percent less than they were at peak levels, although there is substantial variation among City of Chicago submarkets. In suburban Cook, prices are 21.9 percent off peak levels.
Recovery from bottom
- As of the fourth quarter of 2017, all submarkets in Cook County have experienced at least a 17.6 percent price increase compared to their lowest post-recession price levels. Areas with the largest increase from price bottom include Humboldt Park/Garfield Park and Logan Square/Avondale. These areas both have single-family house prices that are 107.4 percent and 73.3 percent higher than their price bottoms, respectively.
- The weakest recoveries have been seen primarily in suburban Cook County. This is largely due to the suburbs being less volatile housing markets with less dramatic price peaks and valleys than many submarkets in the City of Chicago. The suburban area with the weakest recovery is south suburban Winnetka/Northbrook where prices increased by just 17.6 percent from its price bottom. In the city, Lake View/Lincoln Park has seen the smallest price increases since reaching its price bottom (17.8 percent), however, this is the only area in Cook County that did not experience dramatic price declines. So, despite relatively modest growth, prices in Lake View/Lincoln Park are still at all-time highs.
- House prices in Cook County have recovered by 33.6 percent since the bottom of the market. In the City of Chicago, prices have rebounded by 40.7 percent compared to 31.0 percent in suburban Cook.
Price changes since 2000
- As of the fourth quarter of 2017, one Cook County submarket continues to experience price levels below their year 2000 prices. Prices in suburban Calumet City/Harvey were 8.1 percent less than levels in the year 2000. Price levels in suburban Chicago Heights/Park Forest finally exceeded 2000 levels after nearly seven years of below 2000 prices, and are now 2.3 percent above price levels in 2000. In the City of Chicago, the Auburn Gresham/Chatham submarket had the lowest prices relative to prices in the year 2000. Price levels in the fourth quarter of 2017 were just 13.2 percent higher than year 2000 prices.
- As of the fourth quarter of 2017, price levels in two Chicago submarkets were more than 120 percent what they were in the year 2000. House prices in West Town/Near West Side were 179.4 percent higher than 2000 levels, while prices in Logan Square/Avondale were 154.8 percent above 2000 levels.
- House prices in Cook County have increased by 44.3 percent since 2000. In the City of Chicago, prices have increased by 63.6 percent compared to 37.8 percent in suburban Cook County.
To view a full page interactive graph with a map and data for all submarkets go here. Underlying price index data can be found here.
Background on Price Indices
House price trends are one of the most important indicators of a neighborhood’s economic health. In recent years, a substantial focus has been paid to the importance of house price trends as a national or regional indicator of economic conditions, but growing attention is being paid to the implications uneven price declines and recoveries across neighborhoods have for communities and their residents. Neighborhoods with rapidly rising prices may be those facing current or future housing affordability concerns, while areas with slow price recovery may need strategic investment to rebuild demand for housing.
Additionally, the uneven nature of house price declines and recovery across neighborhoods is a stark illustration of the growing divide between thriving and struggling communities and households. Home equity is one of the key vehicles for families to build wealth, and the variation in price trends—which can be used to estimate levels of potential home equity gained and lost by households and neighborhoods over time—can be an indicator of household financial conditions across communities. To help housing stakeholders, policymakers, and the public understand this issue better, the Institute for Housing Studies (IHS) has developed a Cook County house price index to track quarterly price trends for single-family homes in 16 submarkets in the City of Chicago and 17 submarkets in suburban Cook County.
More about IHS' Cook County Submarket Indices
The submarkets in IHS’s price index are based on Public Use Microdata Areas (PUMAs) from the 2010 US Census. There are 16 submarkets in the City of Chicago and 17 that are primarily in suburban Cook County. In the City of Chicago, the submarket surrounding the Loop has been excluded because of insufficient levels of single-family home sales. Click here for a reference guide to the community areas and suburban municipalities found in each submarket. Additional detail about the model can be found at the end of this analysis.
The discussion below highlights four key metrics for analyzing house price trends and describes their patterns and their implications for communities:
Year over Year – This metric illustrates the short-term price trend and compares the current price level as of the fourth quarter of 2017 with the price level in the fourth quarter of 2016. Submarkets with large changes in price levels can be very different relative to each other, but each demonstrating recent increased demand. These include highly foreclosure-distressed areas where prices are starting to recover, as well as rapidly appreciating ‘hot’ markets. Historically, strong markets tend to have low but steady appreciation year over year. Interpreted in conjunction with other price trend indicators, year-over-year price changes can be helpful in identifying rebounding markets with stabilizing prices.
Recovery from Bottom – This metric measures the change in the price level from a submarket’s lowest point after the 2008 collapse of the housing market to the fourth quarter of 2017 and tracks the speed of recovery of single-family house prices. This indicator is an important measure for recent buyers who purchased properties near the bottom of the market and who are trying to understand the return on that investment. The indicator is also valuable for understanding where investment has been flowing since the bottoming-out of the market. This ‘recovery’ metric reflects recent demand for housing that could be driven by owner-occupants competing for a limited supply of for-sale housing in “hot” markets or investors competing for the dwindling supply of low-cost properties in more distressed markets. The difference in types of demand means the recovery metric should be interpreted in conjunction with other price trend data points.
Peak to Current – This metric measures the difference between a submarket’s peak price level at the height of the housing boom and the current price level as of the fourth quarter of 2017, and it captures the recovery of a neighborhood’s house prices towards previous price peak levels. Many neighborhoods that saw a substantial build-up in prices during the housing bubble experienced equally dramatic declines. While those price peaks were often inflated and unsustainable, recovery towards those peaks is an important benchmark for homeowners who bought their homes or obtained a mortgage from 2005 to 2007 when prices were at their highest.
Many homeowners are reluctant to sell their homes for less than what they paid, and, in cases where a mortgage is involved, areas that are well below previous peak values are likely to have larger numbers of underwater or near-underwater homeowners. Owing more on a mortgage than what a property is worth limits an owner’s ability to sell their property and puts a greater strain on a household’s financial conditions. As values get closer to previous peak levels, more homeowners are likely willing and able to sell, more households will exit underwater status, and equity lost during the housing crisis will likely be rebuilt. In areas where values remain well below peak levels, many homeowners likely remain underwater.
Price trends since 2000 – This metric tracks the change in price levels from the first quarter of 2000 to the fourth quarter 2017 and measures long-term price trends. The variation in neighborhood price trends since 2000 is a key indicator of the impact the housing crisis and uneven housing recovery has had, not just on local housing markets, but also on long-term homeowners. Home equity is a key asset for both lower- and higher-income households, and increasing equity over time is one of the ways that both lower- and higher-income households build wealth. In areas where there has been limited long-term price appreciation, long-time owners benefit less from increasing home equity compared to long-term owners in areas with significant appreciation.
The Model
Using its data clearinghouse, IHS has developed a hedonic price index model to provide a stable mechanism to track submarket-level price trends. Unlike a repeat sales model which requires a matched pair of sales on a single property and can be less stable at smaller geographies, a hedonic model combines data on a property’s sales price with data on the physical characteristics of that property and its location relative to key amenities or disamenities. The statistical model controls for factors that contribute to price and allows for the development of an index tracking price changes of the typical, non-distressed home over time and is ideal for tracking price trends at the submarket level.
Click here for more information on IHS’s hedonic price index model.
