The market for large multifamily rental buildings in Cook County has seen strong recent price increases, in contrast to the market for smaller multifamily rental buildings, single-family properties and condominiums, according to a second quarter house price index released by DePaul’s Institute for Housing Studies (IHS).

The IHS Cook County House Price Index, which is now available to the public, shows that both smaller and larger multifamily building types experienced substantial price increases from 2000 to their peaks in late 2006, prior to steep price declines.

After the market for both types of multifamily buildings bottomed out, however, price trends have differed sharply. Prices for larger multifamily rental buildings with five or more units have seen a substantial recovery since hitting bottom in 2010. As of the second quarter of 2012, larger multifamily rental buildings experienced the strongest price recovery of any property type tracked by IHS. Larger multifamily buildings have experienced three consecutive quarters of price increases, and between the second quarter of 2011 and the second quarter of 2012, prices for large multifamily buildings have increased by more than 30 percent.

Conversely, smaller rental buildings with two-to-four units are still at levels more than 55 percent below what they were at their peak. These smaller multifamily buildings have seen very limited price recovery since reaching bottom in 2010, and prices at the end of the second quarter of 2012 were at pre-2000 levels.

“Larger multifamily buildings have benefited from the recent strength of the rental market, but smaller multifamily buildings have not,” said Geoff Smith, executive director of IHS. “In part, this is due to specific challenges associated with two-to-four unit buildings, such as being heavily impacted by foreclosures, being largely concentrated in neighborhoods with weak demand and having fewer financing options available for potential investors.”

Meanwhile, the single-family housing market in Cook County has shown some signs of modest stability, experiencing quarter-over-quarter price increases in the past two quarters. However, the single-family market remains weak. Despite these recent quarterly increases, year-over-year, single-family home prices declined by roughly 3 percent from the second quarter of 2011, and as of the end of the second quarter 2012, single-family home prices in Cook County were down by 39 percent from their peak in 2006.

As of the second quarter of 2012, single-family home prices in Cook County were at a level similar to that seen in the second half of 2000.

The IHS Cook County House Price Index examines quarterly price changes and allows for comparison in price trends for the four primary property types found in Cook County: single-family homes, condominium units, small multifamily rental buildings with two to four units and larger multifamily rental buildings with five or more units.

“Understanding house price trends is important for tracking the health of the local economy, developing responsive housing policy solutions and monitoring the value of housing investments,” Smith said. “Although there are many house price indices that track national and regional price trends, most do not provide data to the public that would allow for a detailed understanding of what is happening within local housing markets.”

The IHS Second Quarter 2012 Cook County House Price Index is the institute’s first report of this kind and reflects house price changes on properties with repeat sales between 1997 and the second quarter of 2012. The index illustrates the recent boom and bust cycle of the housing market and the residual effect that the foreclosure crisis has had on house prices in Cook County.

Visit housingstudies.org for the most recent summary of quarterly IHS Cook County House Price Index data. Archived quarterly summaries can be accessed in the sidebar.

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About the Institute for Housing Studies

The Institute for Housing Studies (IHS) is a research center based in the Real Estate Center at DePaul University that provides analysis and data to inform affordable housing policy and practice. More about IHS and its research can be found at housingstudies.org.

About DePaul 

With more than 25,000 students, DePaul University is the largest Catholic university in the United States and the largest private, non-profit university in the Midwest. The university offers approximately 275 graduate and undergraduate programs of study on three Chicago and three suburban campuses. Founded in 1898, DePaul remains committed to providing a quality education through personal attention to students from a wide range of backgrounds. For more information, visit depaul.edu.