Forecast : Upturn in US Home Values: Leading Indicators are Bullish on Real Estate

ECRI's U.S. Leading Home Price Index (USLHPI)which was "designed to predict cyclical turns in real home prices, has now been rising for five months." ECRI's data is made available only to clients and as MHN is not a privileged client we are not privi to the data behind the ECRI graphs. However they are a trusted source and their conclusions are quite promising.

The implication is clear: this is a genuine cyclical upturn in the level of the USLHPI. Such an upturn in the USLHPI amounts to a forecast of a cyclical upturn in the level of home prices this year…"

ECRI’s apparent optimism about the economy is very much at odds with a stubbornly downbeat consensus. When almost every seasoned analyst is so pessimistic, doubts about the likelihood of an upturn are entirely understandable.

But we also know that this is precisely the phase of the business cycle when, in the wake of a major crisis, a “giant error of pessimism” runs rampant. It is therefore especially important to remember at this juncture that the opinions we express are based not on our gut feel, but on a system of objective leading indicators with a stronger theoretical foundation and a more rigorously tried and tested record that any others in existence. Its real-time track record is also unrivaled. Our confidence in their predictive power is based on long experience with these indicators.

While more analysts are coming around to our view about the economic recovery, there are plenty that remain doubtful. Only the reality of the recovery will convince such skeptics, but by then it will be much too late for decision makers to take timely steps to stay ahead of the curve.

We understand that some will be incredulous about our home price upturn call, coming on the heels of our business cycle recovery forecast… it is worth remembering that our apparent boldness is merely a reflection of what our objective leading indexes are telling us today."

As stated earlier ECRI is a trusted source. It is unfortunate that I don't have the data from which they derived this conclusion. If this is true it will have a substantial impact on NYC real estate. Real Estate prices is based upon demand and people are here because of the jobs.

Now before it sounds as if I have nothing but praise for ECRI let me say that they are professional contrarians and make their money by having people buy their data and their analysis. They spend a lot of time upselling their products. I read one of their books, "Beating the Business Cycle," and too much of the book was spent praising ECRI and upselling their data.