[Fredslist] Re: Real Estate 101 (Thanks Giants Promo)

[JADLER115 at aol.com]

Past  results help determine where market may  go
Monday,  February 04, 2008

_By Avram  Goldman_ 
(mailto:opinion at inman.com?Subject=Letter%20from%20Reader%20RE:What%20Super%20Bowl%20%20outcome%20means%20for%20real%20estate)  
Housing  cycles are supposed to be characterized by long trend intervals -- 
long  periods of ups and downs. Today our markets are behaving much like the  
stock market -- one week up and the next week down. My guess is that  depending 
on the news home buyers ingest during the week, they tend to  react much like 
investors in other asset classes. This makes it more  challenging to predict 
where the market is headed.  
As a kid I  grew up next to railroad tracks, and one of my joys (to the 
chagrin of my  parents) was hopping onto slow-moving trains. In order to know when 
trains  were coming we would put our ears on the tracks and see if we could 
detect  the faintest of sounds to know the train was on its way. It worked for 
the  trains; let's see if it can work for the housing market.   
I delayed  finishing this report over the weekend because it was time to go 
to the  Super Bowl party. I did this deliberately so I could let the New 
England  Patriots and New York Giants aid us in determining which way this market  
is moving. The reason is that the equity markets have had an uncanny  direct 
correlation to the housing market or visa versa for the past  11-plus years. 
They are tied at the hip. Whoever wins the Super Bowl,  meaning which conference 
and which team, we can look at past Super Bowls  and see how the market has 
performed over the ensuing year to determine  which way the wind is blowing.  
Going all the  way back to 1967 and measuring return, it has been more 
advantageous when  the NFC wins. The S&P 500 has been positive more often than 
negative  (86 percent versus 63 percent of the time) with above-average market  
performance in the Super Bowl year (NFC wins, +16.4 percent vs. AFC wins,  +7.1 
percent). Since the Giants won, we have a good thing going.   
Now from a  team perspective, when the Giants have won, the results have been 
more  favorable than when the Patriots have won. In the Giants' two previous  
wins (1987 and 1991), the S&P rallied 17.8 percent on average.  Although, 
when the Patriots won (2002, 2004 and 2005) the market was -2.1  percent on 
average.  
More  impressive is when the Patriots lost the Super Bowl in 1986, and in 
1997  the markets rallied 25.8 percent on average. Now we are talking. It is a  
good thing the Patriots lost last night because the last time we had a  team go 
undefeated (the Miami Dolphins in the 1973 Super Bowl) it preceded  the 
1973-74 economic recession where the S&P 500 dropped 14.5 percent.   
Finally, the  two times that the Giants won the Super Bowl economic 
conditions were  similar to our current situation. The 1987 win preceded the October 
stock  market crash, and the 1991 victory was during the last major housing  
recession. The good news is that in both cases the markets moved higher  (1987, 
+5.1 percent; 1991, +30.6 percent).*  
Thank you Eli  Manning and the N.Y. Giants' defense team. Your win is the 
best news we  have had since last summer. This is even more encouraging since the 
week  of Jan. 21-27 saw home sales slow once again. The best thing that could 
be  said is that open-house attendance was still brisk.   
Now from what  I have heard about this past week from agents (which will be 
discussed in  my next report) is a possible pick-up in sales activity, which 
might have  been a precursor to the Giants win. 
Go Giants --  Super Bowl champions! Now I wonder what this means for the 
presidential  election. 
*Statistics  provided by Deutsche Bank 
Janet 
Janet Adler Realty, Ltd

212  427 3809
917 834  2247





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