Why 49ers Victory could be Good for Stock Market - and maybe Housing, too
Posted on February 2, 2013
At long last, our 49ers are back in the Super Bowl. It's been 18 long years since they last played on the world's biggest stage for the ultimate prize. And if history is any indicator, the entire country should be rooting for the Niners - not just fans like us around the Bay Area.
That's because when the 49ers win the Super Bowl, it almost always bodes well for the stock market in the coming year – and usually the housing market, too.
When the Niners won their first Super Bowl in 1982, the Dow proceeded to climb 19.6% during the year. And things got only better with subsequent Super Bowl victories. In 1985, the Dow finished up 27.7% and again 27% in 1989. The biggest year: their last Bowl win in 1995, when the Dow was up 33.8%.
The only down year in the string was 1990, when the Dow fell 4.3%. But on average, the market enjoyed a better than 20% gain during those five Super Bowl years.
The housing market has also seen fairly strong appreciation along with most of the Niner Super Bowl victories.
Data from the Federal Housing Finance Agency shows San Francisco's home price index climbed an average of 5.4 percent during the years they won the big one. Four of the five years saw gains with the highest being 16.6 percent in 1989. The one exception was 1990, when the index fell 2.6%.
California averaged a 4.1% annual median sales price gain during those years as well, rising three of the five years, according to figures from the California Association of Realtors.
Certainly, the weekend started off well on Friday with the Dow surpassing the 14,000 mark for the first time since 2007. Stocks rose Friday after the latest employment report showed that the country added 157,000 jobs in January, and that hiring for the past two years was better than thought.
So as we root for a Niners victory in the Super Bowl Sunday afternoon, don't forget – what's good for Bay Area football fans could also be great news for the rest of the country and the housing market as well! (For those of you who may doubt my economically and scientifically sound approach to predicting our markets based on a Super Bowl win, I have provided to you below the actual facts from our offices, indicating robust activity, majority of sales in multiple offers, and not enough homes to sell)
Below is a market-by-market report from our local offices:
North Bay – Marin County continues to struggle with inventory, yet there is so much activity. When properties come on the market, everyone must see them and act quickly. Multiple offers and over bids are de rigor. We are seeing a trend of off-market listings and properties going into contract without being fully exposed to the market. This is NOT in anyone’s best interest. Sellers may be leaving money on the table, while buyers may be overpaying. There is nothing like the open market to determine true market value. Best to under-price in this market than overprice. If it’s worth more, the market will take it there. If you start too high, you will be quickly looked over and your property will have a stigma attached… eventually fetching far less than the seller would have hoped for. The good news is that sellers do see this as a good time to act. $2 million range is hot in all markets – Larkspur, Ross, Kentfield, Tiburon, Mill Valley, and Sausalito. Our Petaluma manager says the normal market now features multiple offers. Some 32 offers were submitted on a property in Petaluma in the $250,000 range. There have been double-digit multiple offers in all price ranges. In Sebastopol, our local manager says sellers who may have been upside down last year are holding off listing in the belief if they wait they will return to an equity position. As of this morning there are only 602 homes available for sale in all of Sonoma County for all price ranges.
San Francisco – Offers in double digit multiples, open house visitors in droves, but houses to buy in incredibly short supply, our Lakeside office manager reports. Buyers are feeling terribly frustrated after missing out on multiple offers multiple times. Yet they don't want to give up because prices seem to have an upward lift and interest rates are excellent so waiting could cost them money. Our Lombard manager says prices are way up and interest rates inching up, which may bring some sellers into the market. Everyone is looking for inventory. The smart buyers are compromising on their dream home, looking at lower price points, then jumping in aggressively. Others are on the sidelines. Our Market Street manager notes that inventories remain at way-too-low levels. Everyone is hoping it will increase following the Super Bowl. With so few homes available, buyers are climbing on top of each other to scoop up those few properties that are for sale. The lack of inventory continue to drive prices upward, our Sunset manager reports. Open houses continue to be extremely active. A typical open house will have 50-100 groups though in a two-hour period. One “fixer” listing, price at $800,000, that is not financeable, received 19 cash offers with the highest bidder offering more than 30% above asking. At the end of the day, there are still 18 cash buyers looking to buy. And our Van Ness manager says December 2012 and January 2013 are roughly twice as busy as the prior year.
SF Peninsula — There are 14 active and 16 pending sales in Burlingame. Low inventory continues to be a problem everywhere. It is amazing how agents keep coming up with properties to sell to their waiting “pent up” buyers. Our Burlingame office just had 50 offers on a pair of fixer properties in San Mateo, which sold all cash substantially over asking price. There is little new inventory coming on in Hillsborough, however the high end is starting to show movement with four properties over $10 million and two over $5 million now in escrow. This is very encouraging to see high-end buyers actively in the market. Our Palo Alto manager says the inventory is even scarcer (if possible) than last year – while the demand is higher. Lack of inventory is the biggest concern for agents and clients in the Redwood City-San Carlos area. Agents are working in a wider area in order to find properties for their buyers. In San Mateo, our manager sees a slight increase in listings. Homes that are off-market coming back on the MLS in the Woodside and Portola Valley area. Sales have picked up over the past two weeks. Everyone has lots of buyers – not too many sellers yet.
East Bay – Inventory shortage continues: Only seven Berkeley houses on last week’s brokers’ tour and eight for sale in Berkeley. There were only 24 on a tour that covers Hercules through Oakland. Our Oakland-Piedmont manager reports that the only sale that did not have multiple offers was a pre-emptive offer that was received, evaluated and accepted by the seller. The number of offers range from two to 13. Open houses have become inundated with buyers; several open homes throughout the city had over 80 groups through. The majority of open houses need to have at least two agents holding them open in order for anyone to have a meaningful conversation with potential clients and get contact information. Listings are very slowly coming on the Lamorinda market. Buyers continue to be very active. Open homes are heavily attended with large groups of buyers. Our Walnut Creek manager says inventory seems to be disappearing. Agents have buyers ready to buy, but nothing to sell them. Agents are still selling new construction when possible.
Silicon Valley – Things are heating up in the Cupertino market. Most of the agents are working hard to find homes for their many buyers. According to our Los Gatos manager, agents' biggest challenge is keeping sellers out of the stratosphere and realistic on their pricing when they hear about the hot seller’s market. Our San Jose-Almaden manager says inventory is increasing, although at a slow rate. Almost all offers seem to be multiple offer situations. That's echoed by our San Jose-Main office. And the Willow Glen manager reports agents continue to bring in new listings even though the local market inventory continues to shrink. Agents are still facing challenges getting buyers into contract, however buyer demand has not declined. With the Super Bowl weekend coming up, non- football fans may have the leg up on securing a home this weekend. In Saratoga, the local market is "warm above $3 million, hot below $2 million," according to our local manager.
South County – Gilroy is experiencing an extreme shortage of inventory. There are 47 homes for sale – and 42% of those are in the luxury market – according to our Gilroy manager. Every single sale year-to-date has been a multiple offer situation. New listings are not lasting long enough to hold open – and those that are have are getting 25-50 groups through. Many buyers are calling the listing agents directly to see if they can somehow get an “in” working directly with the listing agent. We have seen a 25% increase in price in the entry-level market since this time last year. San Benito County is also experiencing a similar phenomenon. Lack of inventory – down to a mere 51 homes for sale in the entire county – only one is an REO and four are short sales. For all of South Santa Clara County and San Benito County we have less than 1 month of supply. Our Morgan Hill manager says there are a few more homes on the market in that area. Of course, the demand is such that multiple offers are still the rule of the day. More sellers are discovering that their homes are no longer “under water” and that they can either get out from under their mortgage or actually move up to a larger home. This is a very encouraging sign as the market continues to right itself.
Santa Cruz County – Sales in January are consistent and may already be giving us a preview of the promising real estate year to come. Low inventory remains the challenge and agents have had to address this with reaching out to homeowners via letters, door knocking, and calling to find out if have an interest in selling their property. This has been very successful. There is less than a three-month supply of inventory and properties priced well are receiving multiple offers. Prices are inching up. There is a strong sense of optimism and there is an expectation of a very good year for real estate in Santa Cruz County. Buyers have heard the message loud and clear that they need wait no more, and the sellers are smiling again. There is increased activity in all market segments including the Previews (over $1,000,000) in Santa Cruz County.
Monterey County – Sales in last two weeks continue to be as steady as the beautiful weather on the Monterey Peninsula. Still, the last couple of weeks have been a bit quieter both in town and in real estate showings, as it usually is after the holidays and up to the AT&T Pro Am, which gets underway next week. Then the area will be bustling with people, though mostly only interested in the golf tourney. But if the beautiful weather holds out and shows well on TV it sometimes gets people introduced to the area at that time and come back later to look at property, according to our Monterey Peninsula manager.
That’s it for now. Go Niners! I do not want to be writing this column in two weeks explaining about the positive effects on the markets in the years that the Niners simply made it to the Super Bowl!!
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