Redfin Report Quantifies Correlation Between Home Prices and Local Companies' Stock Market Performance
For Every $1 Billion Increase in Stock Value, Prices of Homes Nearby go up $4,400 Three Months Later
SEATTLE, Oct. 17, 2013 /PRNewswire/ -- Redfin (www.redfin.com), the technology-powered real estate brokerage, today released a report analyzing the correlation between home prices in a given area, and the stock valuations of publicly traded companies nearby. The study incorporates home prices and aggregate stock valuations of 824 public companies across 19 metro areas over the last 20 years, and ranks each area from the highest correlation to the lowest.
Redfin's report concluded that for every $1 billion increase in stock value of local companies in a given area, the median sale price of nearby homes increases by $4,400. For an area like Silicon Valley, where 45 publicly traded companies are valued at $1.1 trillion, this means that an increase in stock value of just 1 percent could potentially lead to a rise in median sale price of more than $48,000. The report also found that there is typically a three month lag time from a change in a region's aggregate stock valuation and a subsequent corresponding change in local median home prices.
Of the 19 major markets examined in the study, Las Vegas, followed by Silicon Valley and New York, saw the strongest correlation between median home sale price and the stock valuation of local companies. Below is a full ranking of metro areas by stock market-home price correlation.
| Metro Area |
Stock Market Influence Correlation |
Public Company Count |
Zip Code Count |
| Las Vegas, NV |
0.56 |
10 |
6 |
| San Jose, CA |
0.43 |
45 |
18 |
| New York, NY |
0.36 |
150 |
76 |
| Raleigh, NC |
0.33 |
6 |
6 |
| Los Angeles, CA |
0.33 |
82 |
50 |
| Atlanta, GA |
0.29 |
39 |
18 |
| San Diego, CA |
0.29 |
28 |
11 |
| Miami, FL |
0.28 |
24 |
19 |
| Baltimore, MD |
0.26 |
16 |
10 |
| Boston, MA |
0.24 |
75 |
40 |
| Portland, OR |
0.23 |
14 |
10 |
| Washington, DC |
0.22 |
43 |
21 |
| San Francisco, CA |
0.22 |
78 |
31 |
| Phoenix, AZ |
0.21 |
20 |
13 |
| Charlotte, NC |
0.19 |
17 |
9 |
| Chicago, IL |
0.13 |
80 |
31 |
| Seattle, WA |
0.11 |
21 |
14 |
| Philadelphia, PA |
0.08 |
47 |
26 |
| Denver, CO |
0.04 |
29 |
8 |
Examples of this phenomenon include:
- Home to Microsoft, Seattle's median home price is $395,000 today, compared to $212,000 in Albuquerque, where Bill Gates originally founded the company in 1975. A $288 billion dollar company in New Mexico could have drastically changed its home price trajectory.
- Zip code 94043 in the heart of Silicon Valley has seen substantial wealth created since Google went public in 2004. The nearly $300 billion Google valuation, among other local Silicon Valley companies, has helped drive home prices in Mountain View from $600,000 in 2009 to more than $1 million in 2013.
To read the full report in Redfin's Research Center, click the following link. http://blog.redfin.com/blog/2013/10/stock-market-and-housing-market-correlation.html.
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate broker that represents people buying and selling homes. Founded and run by technologists, Redfin has a team of experienced, full-service real estate agents who are advocates, not sales-people, earning customer-satisfaction bonuses, not commissions. Redfin's online tools feature all the broker-listed homes for sale, as well as for-sale-by-owner properties that don't pay brokers a commission. The company serves 22 U.S. markets and has closed more than $8 billion in home sales. In 2012, Redfin was named one of The DIGITAL 100: World's Most Valuable Private Tech Companies by Business Insider. Follow us on our blog (blog.redfin.com), Twitter (@redfin), and Facebook (facebook.com/redfin).
SOURCE Redfin
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