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September 22, 2014

Study: When Stocks Rise, So Do Home Prices

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Study: When Stocks Rise, So Do Home Prices

Home prices in a given area tend to increase when the stock valuations of nearby publicly traded companies go up, according to a new Redfin study. For every $1 billion increase in stock value of locally based companies, the median sales price of nearby homes increases by $4,400, the study found.

Redfin analyzed home prices and stock valuations of 824 public companies across 19 metros over the last two decades. In Silicon Valley — home to 45 publicly traded companies valued at a total of $1.1 trillion — an increase in stock value of just 1 percent could lead to a rise of more than $48,000 in the area's median home sales price, according to the study. 

Redfin notes that it may take three months for a change in companies' stock valuations to affect home prices.

The study found the following metros had the strongest correlation between median home sales prices and the stock valuations of its local companies: 

  1. Las Vegas
  2. San Jose, Calif.
  3. New York City
  4. Raleigh, N.C.
  5. Los Angeles
  6. Atlanta
  7. San Diego

Source: “A Common Trait that Silicon Valley, Las Vegas, and New York all Share. Hint: It’s not the Weather,” Redfin (Oct. 17, 2013)

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