Condo price increase across all five cities largely mimic their home price counterparts

May 2012 data for the S&P/Case-Shiller Home Price Indices were released on Tuesday July 31st, with monthly increases in condo prices in all five of the metro areas covered by our indices – Boston, Chicago, Los Angeles, New York and San Francisco. All five cities saw increases in both condo and existing home prices in May over April.

The Chicago index reported the largest condo price increase, up 4.7% in May. The San Francisco index was next, +3.4%. Condo prices in Boston, Los Angeles and New York rose by 2.4%, 1.2% and 2.9% in May, respectively.

With May’s report, Boston’s condo prices showed positive annual changes for the third consecutive month, up 2.4% versus May 2011. New York and San Francisco annual rates of return entered positive territory in May. New York condo prices were up 3.1% and San Francisco up 1.6% versus where they were in the same month last year.

Chicago posted the largest annual decline, -5.1%, but May’s monthly 4.7% increase has put the index level back above 100. A value of 102.62 indicates that average condo prices in Chicago were back to their March 2000 levels. After having fallen 19 consecutive months, Los Angeles condo prices were up in March, April and May. At an annual rate, they were still down 3.7% versus May 2011.

The chart below compares the index levels for the five condo markets covered by the indices, rebased to 1995 = 100. Chicago (grey) is well below the other cities, showing that average condo prices are back to their early 2000 levels. On average Los Angeles (blue) and San Francisco (red) condo market prices are back to their mid-2003 levels. Boston (black) and New York (green) are relatively healthier, with both markets more than 165% higher than they were in January 1995.

While all five markets improved in May versus April 2012, the Boston, New York and San Francisco condo markets have shown the most recent stability when compared to a year ago, as the table below highlights. In addition, San Francisco was the only market where both condo and home prices were increasing at an annual pace. Boston home prices were down a modest 0.1% versus May 2011. New York has shown relative stability in the condo market, but has seen recent weakness in the housing market. Home prices in that market were down 2.8% in May 2012 versus May 2011, and had posted a post-recession low in March. Chicago is the weakest across both housing and condo markets, but Los Angeles is also seeing condo and home prices below their year-ago levels.

The chart below illustrates the differences between Boston, Chicago and New York condo and single-family home prices since 1995. The purple and green lines show that the Boston and New York condo markets are the best relative performers during the housing crisis. Both markets’ condo prices are still up over 165% versus January 1995; whereas Chicago prices are up only about 30% (and as discussed above are back to their March 2000 values). In spite of their May 2012 surge, condo prices in Chicago have fallen by 36.3% since their September 2007 peak; whereas the Boston (-12.3%) and New York (-13.8%) markets have fallen by less than half that rates from their relative 2005/2006 peaks.

The chart below shows the differences between New York, Los Angeles and San Francisco since 2000. The green, grey and orange lines show that the New York condo market has been the most stable over the past three years, while the California markets have, until very recently, weakened. The LA condo market has fallen by 40.9% since its July 2006 peak; the San Francisco market has fallen by 30.5% since its October 2005 peak; but, as said above, the New York market has only fallen by 13.8% from its February 2006 peak.

Across all cities, however, both the single-family home and condos prices rose in both April and May 2012. Improvements in annual rates of change indicate that this may not be just do to seasonal factors, but it will take several more months of data to determine where momentum lies.