Housing Bounce Starts in 2011, Says Index of Top Experts


If you're keeping track of all the real estate surveys out there, add this one to your list: MacroMarkets, the research firm founded by housing sage Robert Shiller, has started releasing a monthly "home expectations survey" that asks a hundred of the country's top housing analysts to forecast prices five years out.

And guess what? May's consensus predicts national home prices, as measured by the benchmark S&P/Case-Shiller Index, to start recovering next year. That might seem optimistic, as the index has been sinking steadily over the past three years, with only one uptick posted so far (in February's data, the latest available).

After a fat zero predicted for this year's price gain, the survey sees 2 percent growth next year, a pace which adds up to a cumulative 12.36 percent by the end of 2014. The range of predictions for 2014 runs from a depressing -17.99 percent to a giddy +36.74 percent.

"This is not necessarily a resounding indicator of a raging bull market, but it's a more optimistic projection than we would have seen ... six months ago," says Terry Loebs, MacroMarkets managing director and co-developer of the survey.

But do these numbers mean anything?
As Henry Blodget pointed out on Business Insider: "the vast majority of the analysts in the survey didn't see a crash coming (ever) in 2007." He adds that such a speedy recovery within five years of a bust would be unusual. "Usually after a bubble bursts, prices fall way below trend for a while. If this forecast is right, they won't even have fallen back to trend, let alone below it," he writes.

Loebs counters that old rules don't apply. "We are in uncharted territory," he says. "We're coming off of a historic bubble and an historic series of government programs to support the housing market."

And of course, everyone has a good reason for their forecast.

The Wall Street Journal's James Hagerty spoke to economists on either end of the scale. Gary Shilling, who runs a firm that offers economic advice to"'leading corporations" and institutional investors, offered the most bearish prediction: He is concerned about oversupply of inventory, including those from looming foreclosures (read: shadow inventory). On the other side, James LaVorgna, a Deutsche Bank economist whose prediction was the most bullish, argued that a job market rebound would spark enough demand.

My view: MacroMarket's survey is worth tracking, even if just as an indicator of sentiment. The firm created the influential S&P/Case-Shiller Index and its co-founder, Robert Shiller, is the same Yale economist who warned about the housing bubble long before it was fashionable.

Hopefully this survey will make it easier to spot the Shillers of the next housing bubble. (Pun fully intended.)

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