Chicago Real Estate Prices Drop, Nationally Rise 0.3%

Just as Chicago breaking news reports that home prices in the Chicago fell 1.6 percent in December, nationally prices continue to tick up 0.3% according to S&P / Case -Shiller.  The Chicago real estate news is the sharpest decline among the top 20 metropolitan markets in December, according to a widely watched housing index released Tuesday.  S&P/Case-Shiller Home Price Indices recorded a year over year decline for the Chicago market of 7.2%.  15 out of 20 major metropolitan areas saw increases in housing values with Chicago, New York and Miami among the few dropping.
The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100 meaning that a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.
As the amount of inventory drops and first-time homebuyers take the plunge, prices should stabilize further and increase locally.  The National Association of Home Builders (NAHB) issued a statement indicating the amount of new homes being built is far below demand and the country may soon face a housing shortage.
NAHB industry economists project that the industry will need to produce 16 million homes over the next 10 years to keep pace with demand. As the excess inventory is worked off, which is likely by the end of 2012, the long-run demand for new housing — based on population growth, immigration and the replacement of losses from the housing stock — will average approximately 1.5 million single-family and 300,000 multifamily units annually, or about 1.8 to 1.9 million total starts.   NAHB is predicting 647,000 total housing starts in 2010 and 991,000 in 2011, both far below population demands.
Apartment starts are too way down from proper replacement averages.  Builders are expected to break ground on only 87,000 multifamily units this year, according to NAHB projections, compared to an average of about 300,000 in recent years.
All this data from the NAHB points to yet another swing towards a large amount of housing starts sometime in the future and increased demand on the existing housing stock.