Cook County House Price Index
Changes in house prices are one of the most significant indicators of the broader health of regional and neighborhood economies, and understanding trends in house prices is important for creating policies that are responsive to the dynamics of the housing markets in different communities. For example, homeowners in areas that have seen dramatic and persistent price declines are more likely to be underwater on their mortgages, and effective housing policies targeted to these communities must address this challenge. Conversely, areas that are experiencing significant price increases will have to deal with challenges around housing affordability, and policies should focus on ensuring continued access to affordable housing for households with modest incomes. Additionally, understanding house price trends allows existing property owners to track the value of their investment and gives prospective buyers and investors the opportunity to compare price changes across different markets or submarkets.
The Institute for Housing Studies (IHS) has developed a Cook County House Price Index that allows users to track quarterly changes in prices at a much more granular level than national indices that tend to consider the entire Chicago metropolitan area as a whole. IHS’s Cook County House Price Index examines price changes for single family homes in Cook County. The IHS Index also tracks the variation in price changes between areas that have experienced different levels of concentrated foreclosure activity throughout the housing crisis. Annually, the fourth quarter release of the Index also tracks house price changes in 19 submarkets located in the City of Chicago and 14 submarkets in suburban Cook County.
For the most recent summary of quarterly IHS Cook County House Price Index data, click here. Archived quarterly summaries can be accessed in the sidebar.
Methodology and Data
The IHS Cook County House Price Index is a repeat sales index. The Index uses a set of properties that have sold multiple times and takes the changes in values of these properties from the previous and current sales prices to estimate broader changes in prices for the Cook County property market. Because repeat sales indices track sales price changes on the same property, they are able to better control for variations between properties in property characteristics and location. This methodology is similar to that used by major national price indices such as Case-Shiller, CoreLogic, and the Federal Housing Finance Agency.
The Index uses real estate transaction data from the Cook County Recorder of Deeds via Property Insight which is supplemented by data from Midwest Real Estate Data (MRED). It includes transactions since 1997. The Index also uses data from the Cook County Assessor’s Office to identify the universe of total parcels, and the location, property type and assessed value of individual properties in order to properly weight transaction activity.
The Index includes both distressed and non-distressed sales in Cook County. Distressed sales are those associated with some type of foreclosure activity such as a short sale, sale at a foreclosure auction, or sale from a financial institution’s inventory of Real Estate Owned (REO) properties. The Index excludes transactions where no sales price was recorded and non-arm’s length transactions. To screen out properties with extreme price changes which could indicate data recording errors, potential substantial home improvements, or possible fraudulent activity, properties in the top and bottom five percent of annual price changes were excluded. Properties that were converted from one property type to another, such as from multifamily to condominium, were also removed. Additionally, the sales of new construction properties were not included in the Index because they lack a previous sale on which to base price changes.
For more information on the methodology and data used to calculate the IHS Cook County House Price Index, download the technical paper here.
Index values are pegged to a price level set at the first quarter of 2000 which has an index value of 100. Index values are not meant to represent the actual price of housing, but should be interpreted as measuring the change in the price of housing over time. In other words, an index value of 150 in the third quarter of 2007 should be interpreted as a price increase of 50 percent from the first quarter of 2000 to the third quarter of 2007. Tracking this price index in subsequent periods, an index value of 125 in the fourth quarter of 2010 should be interpreted as a 17 percent decline from the third quarter of 2007. The IHS Index data presented here is seasonally adjusted which allows for comparisons of quarter-over-quarter changes. For each quarterly Cook County House Price Index release, tabular index data for each quarter and property type are available for download.