One of the weaker trends from this morning’s S&P/Case-Shiller home price report was the price line coming out of the Chicago condo market.Despite the propaganda PR spun by Chicagoland Realtors, prices are headed south and, in some sense, capture the “head fake” created by the Feds market meddling in pristine fashion.
Last year, as the market was making its way down the road of mean reversion, the Feds took it upon themselves to thwart this healthy re-pricing.
They stepped in with tax gimmicks, quantitatively eased lending rates and largely temporary (and failed) foreclosure mitigation plans in an attempt to win the hearts and “minds” of the senseless American consumer.
The trick worked for a bit, with surging sales and rising prices well into late 2009 but eventually the underlying trend of reversion reemerged.
In fact, prices are now down over 12% on a year-over-year basis and 4.84% since just last month.
To put that startling pace of decline in perspective, the recent price drop would put anyone who purchased a home within the last 12 months with less than 12% down under water while also stripping all the equity from any “buyer” who closed in just the last 30 days with less than 5% down.
The “shock and awe” stimulus is now complete and with it goes all the fraudulent housing trends of the last twelve months.
Gone are the count-down clocks, the full page ads, the tax credit induced sense of urgency, the skewed sales and prices… back is reality and many markets may soon follow the lead now seen in Chicago.
