I’ve covered the effects of IPO’s on house prices in the past on a couple of occasions, but the correlation of the former doesn’t always lead to a rise in the prices of homes. Good examples of the separation of offerings and home prices can be demonstrated by recent IPO’s by Uber, Lyft and Pinterest, to name a few. If IPO’s automatically led to a boost in prices, then Bay Area homes should have taken flight like the proverbial rocket. However, San Francisco’s median price only jumped1.2% higher in May than a year earlier. Condo prices have actually fallen by nearly 3/4 0f a percent in the same period.
Another factor in the slowdown on prices is the usual summer slowdown in the market. Would-be sellers often wait until summer’s over before putting their homes on the market as they expect higher prices immediately after Labor Day. This trend doesn’t appear to be affected by a run in IPO’s.
Another factor arising from lack of effect by IPO’s is the fact that although many of the firms recently doing IPO’s have large staffs, most of whom require housing or likely to ‘move up’, few of those employees directly benefit from the IPO’s. To the contrary, most employees immediately benefitting from IPO’s by their firms are founders of the firms, senior management or historically early employees. People in these groups are those most likely to have received stock shares or options as part of their compensation packages. Thus, only a small number of an IPO firm’s employees are likely to be running around with fistfuls of cash to buy bigger or more expensive homes.
So,, the word here is, if you’re a Seller, proceed as you would have even in the absence of a rash of IPO’s. Sit down with your Realtor, make a plan for your goals and, most important, make sure your house is all ready for the market. Timing may be important, as noted above, given the arrival of summer. You may wish to target the post-Labor Day period as the best due to the fact that buyers will largely be back to normal lifestyles/activities and ready to buy given the end of summer.
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