Chicago-area Home Prices Drop in January

By Kevin Robinson in News on Mar 31, 2010 4:40PM

The Associated Press is reporting that Chicago-area single-family home prices saw the biggest drop among 20 cities in January, according to The Standard & Poor's/Case-Shiller home price index. Chicago-area prices dropped just over four percent compared to last year, and a bigger dip than the 0.7 percent year-over-year drop for the 20 cities combined.

The decrease for the 20-city index was the smallest annual drop in almost three years and in line with analysts' expectations, according to Thomson Reuters. “There was some positive momentum in home prices in January,” wrote Ian Pollick, a portfolio strategist with TD Securities. Better still, prices rose 0.3% from December to January on a seasonally adjusted basis, the eighth consecutive monthly gain. Among the 20 cities in the index, 12 rose. The index, released Tuesday, is up nearly 4% from its bottom in May 2009, but still almost 30% below its May 2006 peak.

Still, there are signs that last year's housing rebound won't last. Home sales sank during the winter, and government incentives that have propped up the market are ending.

Analysts fear that bigger home prices may be in store as the first-time home-buyer credit expires. “It is only a matter of time before the index records a double-dip in prices,” wrote Paul Dales, an economist with Capital Economics. He's expecting a five percent drop in prices.