About 40 years ago, a sportswriter came up with an "indicator" of the year's stock market performance based on which team won the Super Bowl at the start of that year. There's not much purpose in going into details -- like all of these kinds of market predictors, time has proven it to be bunk.
But Glenn Kelman, CEO of the real estate website Redfin (NASDAQ: RDFN), says that if you know what to look for on Super Bowl weekend (hint: it's not Tom Brady's passing statistics), you can get a pretty good idea of how the real estate market is going to go the rest of the year.
Kelman tracks home sales during the weekend of the big game. He recently told NPR's The Indicator podcast that sales that weekend serve as a reliable indicator for how real estate will perform for the whole year.
"That weekend is the weekend where the housing market either goes crazy or it takes a nap," Kelman told host Stacey Vanek Smith. "It's sort of a Groundhog Day for the housing market. What I'll be watching that weekend is just how many people are touring houses, and on Sunday night, how many of them decide to make an offer."
Check out the latest earnings call transcript for Redfin.
How will 2019 be?
Most people understand that Punxsutawney Phil (the gold standard for groundhogs) does not actually determine when winter ends. Kelman, however, fully believes that what happens in the housing market on Super Bowl weekend tells the tale for the rest of the year. He told Smith how this year's data played out while explaining the trends leading into Super Bowl weekend:
So in the first three or four weeks of January, it was very hard to tell. And then the week before the Super Bowl, oh, it was looking kind of good. And then the week of the Super Bowl, oh, yeah, it's looking real good. I wouldn't say that we're out of the woods yet, but demand is significantly stronger. And what's really interesting and weird about this is just what a knife's edge the economy is walking on right now. Rates have come down a little bit. They were at 5 [percent] and now they're at 4 1/2.
Mortgage rates coming down brought buyers back into the market, according to Kelman. He was careful to explain that the market isn't great, calling it "less worse" than things were in the second half of 2018.
"In the second half of the year, things were pretty bad. If you put a house on the market, it was really hard to find a buyer," he said. Now, Kelman admits that the housing market isn't as strong as it was in January 2018, but he's encouraged by its direction.
"It's still not as easy as it was in January 2018," he said. "They were selling like hotcakes. There were bidding wars in almost every American city except for Oklahoma City. And now, that isn't the case, but there's a lot more demand than there was in the second half of 2018."
It's still tenuous
While Kelman is optimistic, he admitted that his Super Bowl weekend forecast isn't a sure thing. He noted that market conditions are strong now where inventory has increased, which limits bidding wars, but it has not grown by enough to make it truly a buyer's market.
"I think there's a feeling in the economy right now that the good times are here, but we're not sure how long they're going to last," he said. "And it's made everybody just extraordinarily sensitive to economic events."
"At the first sign of bad news, some buyers head for the hills," Kelman explained. "This is one reason why the stock market has been so volatile over the last two quarters. ... In coastal markets where homes are approaching a median price of a million dollars, people are using their portfolios to pay the down payment. In 2019, those portfolios are doing better, and the economy has kept chugging along, with low unemployment, some wage growth, mostly good earnings. When The Fed backed off on rates, it really gave the housing market some room to recover in 2019."
Redfin has not released any hard data for Super Bowl weekend. In January, however, the average sale price rose by 2.9% year over year and the backlog of homes for sale jumped from less than one month in January 2018 to 4.2 months this past January.