Matrix Blog

Historical, Landmark, Milestone

Super Bowl Housing Correlations (Well, Not Really) and The Super Ball

February 6, 2006 | 12:06 am | |

As we enter the post-Superbowl housing market, here’s a few items of interest (well, at least to me). Actually, I never thought of the Superbowl as a milestone for the housing market, but some people apparently have.

But what few folks may know is the fact that the Super Ball ended up becoming the idea for the term “Super Bowl.” The first two contests between the NFL and the AFL were labeled the “World Championship Game.” After the second such contest, the owners were sitting around trying to come up with a snappier name when Lamar Hunt, the guiding light of the American Football League, and the owner of the AFL’s Kansas City Chiefs, remembered watching his daughter play with a high-bouncing Super Ball a few days earlier and ‘ball’ morphed into ‘bowl.’ Voila…Super Bowl!

The Super Bowl Indicator predicts a good year for the stock market if a team from the old NFC wins and a bad year when a team from the AFC wins. Then again the Super Bowl Indicator has lost some of its magic in recent years. Maybe we should switch to political indicators, which would suggest big gains in stocks during an election year.

But is the stock market truly showing signs of prosperity, or is it just BS?

I would like to suggest the latter and that it might not be a good time for you to obtain a home equity loan to invest in hot tech stocks. We are going through a housing bubble, and stock valuations as measured by stock price-to-earnings (PE) ratios are at bubble levels. The buy low, sell high philosophy would lead you to sell stocks now, not buy them.



In the ever-escalating battle to turn the Super Bowl, the premier U.S. sporting event, into a defining metaphor of American life, Merrill Lynch & Co.’s chief economist for North America, David Rosenberg, has broken new ground.

He says the economic numbers favor the Seattle Seahawks over the Pittsburgh Steelers in the National Football League’s title game, which often turns into a tongue-in-cheek referendum on the competing cities. Las Vegas oddsmakers favor the Steelers over the Seahawks today by 4 points.

“If the Seahawks match up to the city’s relative economic and market performance, then the oddsmakers may have the wrong team,” Rosenberg wrote in a Feb. 2 report after reading a sports column titled: “Give Me a Good Reason to Root for the Seahawks.”

Take job growth, for instance. That goes to Seattle, with 3 percent in 2005 to Pittsburgh’s 0.2 percent, according to Rosenberg. There’s unemployment: Seattle edges Pittsburgh, 4.6 percent to 5 percent. And Seattle home prices jumped 13 percent last year compared with 4 percent in Pittsburgh, Rosenberg wrote.

Well, Pittsburgh won decisively, so the moral of the story is: there is no correlation between the Superbowl and the housing market, as much as we would like there to be.

AP



In Good Times and Bad, Negative Milestones Often Define The Real Estate Market

January 11, 2006 | 9:48 am | | Milestones |

I was writing another post about the housing situation in New Orleans and I kept coming across the phrase “post-Katrina” as in “post-Katrina policy landscape” [NYT] and it struck me how much negative economic or natural disasters help define a new period for the real estate market.

It gives people the ability to sweep away everything that occurred prior to the event and see things in the current market with a little more clarity. At that moment, history plays a lesser roll in defining how the current market is behaving.

It can also be a stressful period because, like most markets, buyers don’t like the unknown. When economic parameters change or are likely to change because of an event, its takes a while for participants to get used to the new rules. Its a delicate moment in time when buyer/seller psychology is at its weakest or most raw and the potential for misinformation is most high.

I find this whole concept this akin not to asking when it comes to real estate, “what were you doing when Neil Armstrong stepped on the moon?” but rather “where were you when the plane hit the north tower on 9/11?”

The irony is that the whole idea of real estate exudes optimism, hope, success, growth, shelter, safety and opportunity, but the events that define it are most often negative.

Here’s a list that help define my interpretation of the real estate market after 20 years in the business. Some are more specific to New York City because that is where I work and there are certainly other milestones to consider. It also seems to me that the milestones are getting closer together, but that might just be only because they are more fresh in my thinking.

Milestones:

  • October 19, 1987 stock market crash
  • 1990-1991 recession
  • August 1998 stock market correction
  • February – March 2000 NASDAQ correction
  • June 2001 entering the recession
  • 9/11
  • March 2003 – start of the Iraq War
  • June 2004 – Fed starts raising federal funds rate
  • August – September 2005 – Hurricane Katrina and Rita


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