See where Cook County home values have changed most in 15 years
Tuesday, November 17, 2015
Crain's Chicago Business
by Dennis Rodkin
The beginning of the 21st century has been especially good to homeowners in the Avondale, Logan Square and West Town neighborhoods, where homes are worth more than twice than what they were in 2000.
Not so in Calumet City and Harvey, where home values have declined 24 percent in the past 15 years.
Those are the extremes in a new batch of data from the Institute for Housing Studies at DePaul University, figures that underscore the stark contrast in fortunes between Chicago's northern and southern neighborhoods and suburbs. The institute's Cook County House Price Index for the second quarter shows how North Side neighborhoods like Avondale, North Center and Lincoln Square took off in the past 15 years as they were discovered by a new generation of urban-dwelling homebuyers.
They "started out lower than something better-established like Lincoln Park or Lakeview, so when they caught on, there was more potential for going up," said IHS Executive Director Geoff Smith.
Some of the neighborhoods were barely even recognized by the real estate market at the time.
"Avondale wasn't on our radar in 2000, or even several years later," said Karen Ranquist, a Berkshire Hathaway HomeServices Koenig Rubloff Realty Group agent who with her husband, developer Bob Ranquist, has been working since the 1990s in Bucktown, in the West Town/Near West Side submarket.
Back then, buyers who came out of the better-known lakefront neighborhoods were mostly drawn by relatively low prices, Ranquist said.
"They were saying, 'Look, if we're going to give up the lakefront, we're going to need something to make it worthwhile,' she said.
Now those neighborhoods have some of the city's most fertile shopping and dining strips, improved parks and schools, and the new 606 bike path.
The DePaul institute divides Cook County into 33 submarkets, 16 in the city and 17 in the suburbs. Price indexes for 10 submarkets have risen more than 50 percent since 2000, though all are still below peak levels reached before the housing crash. The median submarket rose 42.1 percent from 2000 to through the second quarter.
Here's the report showing how all 33 submarkets fared
The IHS calculates its index by tracking changes in home prices but adjusting prices based on the specific characteristics of each home, such as its proximity to a transit stop or its bedroom count. The institute believes that its index provides a more precise measure of changes in home values than a simple comparison of median prices or indexes like Case-Shiller, which analyze repeat sales of the same properties.
The index tracks only single-family homes, not condominiums or townhouses.
This house on Thomas Avenue in West Town sold for $392,000 in 2000, and for $720,000 in August, tracking closely to the DePaul institute's Index for the neighborhood.
Photo by Zillow
On the rising side of the chart, suburban areas don't make strong showings, largely because there has been little to rediscover in those long-stable markets, Smith said. The biggest increase in a suburban submarket was seventh-place Winnetka/Northbrook, where prices rose 62.9 percent, according to the index. By contrast, Logan Square/Avondale and West Town/Near West Side both notched price gains of 126.9 percent over the 15-year period.
Suburbs make a bigger showing at the bottom of the chart, where the submarkets of Calumet City/Harvey and Chicago Heights/Park Forest both show home prices at least 10 percent off from where they were 15 years ago.
"It shocks people to hear that after so many years, they're not even getting their original money back," said Noe Favela, a Coldwell Banker agent.
Population drops and the foreclosure crisis hit hard in Calumet City and Harvey. Their jobless rates are higher than the region's, too. In April, when Cook County's unemployment rate was 6.2 percent, it was 9.5 percent in Calumet City and 11.4 percent in Harvey.
Favela sold a house on Lowe Avenue in Harvey in September for $65,000. The sellers were senior citizens who had owned the home for more than 45 years and didn't stand to lose money, but the family had hoped to get about $100,000 for the three-bedroom, one-bath house, he said.
But that would have been ambitious even 15 years ago. After adjustments in the IHS Index, the median sale price of a house in Calumet City/Harvey in 2000 was $92,500, according to the IHS. In the second quarter of 2015, it was 70,596.
In West Town/Near West Side, the adjusted median house price in 2000 was $330,000. In the second quarter of this year, it was up to $748,872.
Smith declined to predict what areas would show the most growth 15 years from now.
Sizable increases like that in all three city areas at the top of the charts have meant that younger buyers coming in now "are looking around the edges for homes they can afford but still be close to everything that's available," said Olin Eargle, an @properties agent who has recently represented buyers in Andersonville, Lincoln Square and Bowmanville.
Among the attractions are the Old Town School of Folk Music, which moved up to Lincoln Square from Lincoln Park in 1998 and hosts a lively schedule of concerts; numerous dining and drinking options along Clark Street in Andersonville, and the new West Ridge Nature Preserve on 20.5 acres of former cemetery land.
The divergence in home price movement between the top and bottom parts of the chart is indicative of "where other types of investment have followed," Smith said. "You've seen intensive investment concentrated in the stronger areas, but in the weaker ones, it's a challenge to get anyone to come in."