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Investments / The Ticker

Company stock values push home prices higher

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On average, for every $1 billion increase in stock value of companies located in a given area, the median sales price of nearby homes increased by $4,400. This may not sound like much, but factor in big cities like Silicon Valley, home to 45 publically traded companies, and rapidly rising prices. Redfin explains this phenomenon:

"We looked at 10 public companies across six zip codes in Las Vegas and found that Sin City had the highest correlation between home prices and stock prices. Zip code 89113 closely tracked the value of Allegiant Air and International Game Technology through the housing bubble, crash, and recovery.

It’s not just the number of bedrooms, bathrooms and square feet that determines a home’s value. Local schools, buyer and seller psychology, fluctuating mortgage interest rates, and economic policy decisions are quantifiable forces in the housing market. With this analysis, we have found that public companies’ stock prices can also move the housing market, with a particularly strong influence in certain markets."

Source: Redfin Blog
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