The supply of new condominium conversions was greater in Rogers Park, but both neighborhoods have been slammed by the housing recession. In Rogers Park in the first quarter of 2006, the median selling price of a condominium was $278,875. In 2006, 336 new condominium units sold, most around $200,000 to $275,000–affordable for those priced out of Lakeview, in which a condominium could be over $100,000 more.

As of last quarter, the median selling price of a condominium in Rogers Park was $62,000. Could this have been a quirk, representing a low median of just a handful of sales? No. Over 150 units sold in Rogers Park last quarter. Half were for less than $62,000, which means that well over half the sales were the result of short sales or foreclosures. Two quarters ago, 218 units sold for a median of $66,250.

It has been a similar story in Humboldt Park. In late 2008, condominiums sold for a median of over $300,000. Even as recently as 2010, some high sales pushed the median back up to $260,000. This was followed by quarterly price drops of 26%, 39%, 62%, 58%, and 63%. At the end of the year, the median selling price was $71,000.

Perhaps more remarkably, the upper quartile — the point above which 25% of units sold — was $103,500. That means that three-quarters of the condo units sold in Humboldt Park last quarter were for about $100,000 or less.

The neighborhood saw a spike in sales in the third quarter, which calmed down in the fourth quarter; however, high selling prices continued through the end of the year. The median sale in Q4 2011 was $700,000, which is higher than at any point since we’ve been tracking data (which goes back to early 2006).

Condominiums and townhomes have held value in North Center, staying at approximately a median of $350,000 since 2007. The median last quarter was exactly $350,000, down just a bit from the previous quarter’s $375,000.

(There are a few coveted school districts in North Center, which may help explain the increase in house sales in Q3, which covers July, August, and September.)

• 7,618 houses sold, about 5% above year-ago levels but 17% below the strong third-quarter reading
• The median selling price of houses citywide was $155,000, slightly below last quarter and below the same quarter last year
• 4,525 condominiums or townhomes sold, about 4% above year-ago levels but 22% below the strong third-quarter reading
• The median selling price of condominiums and townhomes was $209,500, 14.5% below last quarter and 13.5% below a year ago.

The median selling price of condominiums is the lowest since well before the housing boom (before neighborhood level data were available).

These market stats, as well as similar stats and charts for 20 top neighborhoods, are available in Chicago Housing Quarterly.

The 10-city index and the 20-city index arrested their free-fall in May 2009. At that point, they were 33% and 32% off their peaks, reached in April 2006. Since then, the two indices have moved sideways, increasing slightly until January 2010, before sliding down a few percentage points by August 2011.

Chicago also experienced a momentary pause in June 2009, but they posted just three months of increases before resuming their fall, which continued steadily through July 2011. In a time where the national home values have remained essentially flat (June 2009 through August 2011), Chicago area values have fallen another 10%.

The index for traffic of prospective customers stood at 15, the highest level since September 2009.

The index is derived by surveying homebuilders and asking whether they view conditions as good, fair or poor. The survey asks if traffic of prospective buyers is high, average, or low. Index values below 50 indicate that more survey respondents rate conditions poor than good.

Multifamily permits steadily increased through the housing boom. While they are still a fraction of the typical month in the boom, there have been several months in the 400′s during this recession. More than single family houses, multifamily unit permits tend to be sporadic.

Due to the erratic nature of monthly permits, the chart shows the rolling three-month average.

Rental vacancy rates increased dramatically over the period of 2000 to 2009. From 1965 to 2000, the average quarterly vacancy rate was 6.7%; from 2000 to 2009 it was 9.5%. During the real estate bubble, many households transferred from renting homes to owning homes, including new construction, increasing the homeownership rate and, as a result, reducing the number of households in rental housing.

Rental vacancy rates will be affected by a few forces:

• New household formations — During the recession, many young people stayed with family, and other households combined to save money. As the economy recovers, these consolidated households will unwind and demand for either homes for sale or rent will increase. Immigration and the population of working-age people also affect new household formations.
• Foreclosures — As banks unwind their foreclosure backlog, some families will move from “owning” their homes (even if they are not paying their loans) to renting apartments or houses. The backlog is several years, according to some sources.
• Development of multifamily apartments — Few houses are built specifically to rent, so the increase in supply of rental housing comes mostly from new apartment buildings. While apartments are one of the few
• Credit and other deleveraging — New households find it more difficult to move from rental housing to buying homes, so many households will stay in rental housing for longer.
• Owner-occupied housing converting to rental housing — Some houses occupied by owners today will be purchased by investors and rented out. This is more likely to increase the supply of rental housing, and with it may put pressure on rental vacancy rates. Renters of large (2- or 3-bedroom) apartments in walkup buildings may be tempted by the attractive rents offered in houses newly offered for rent.

Vacancy rates in the Midwest region largely tracked the U.S. average until about mid-2001. The Midwest reached its peak vacancy in Q3 2005 at 13.4%. The U.S. would not reach its peak vacancy rate for four years, hitting 11.1% in Q3 2009. In recent quarters, the Midwest has started to trend back to the national average.

The rate was steady at between 62% and 65% until 1995, when rates increased to a U.S. maximum of 69.2% in 2004. They have since fallen steadily, notwithstanding the slight increase last quarter.

Some media outlets questioned whether this signaled a “reversal” in declining homeownership; however, the chart shows about five clear incremental increases in the homeowner rate during the period in which it has fallen overall. The U.S. is still about 2 percentage points above the historical average.

The future stable homeownership rate is likely to be above that historical average because of innovations in housing finance, including securitization, which will likely not go away after the market settles.

Overall, the index declined 4.6% from last month. In the Midwest, the index dropped 6.2%, the sharpest drop of all four regions. Several press reports indicated that the index is above year-ago levels. While true, the pending sales a year ago were especially depressed as buyers rushed in previous months to sign contracts eligible for homebuyer incentives.

A more appropriate comparison than year-over-year would be with January or February 2010, before the rush to sign contracts began. Compared to early 2010, the index is down about 11%.

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Nationally, home prices fell very slightly from last month and remain about 4% below year-ago levels.

The Chicago condo index increased slightly last quarter, but is 10% above its level a year ago.

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