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Initial Public Offerings and Local Housing Markets

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  • Thanh Nguyen
  • Arsenio Staer
  • Jing Yang

Abstract

This study explores the link between corporations’ initial public offering (IPO) activities and the housing markets in the MSAs where the IPO firms are headquartered. Using a sample of 4,500 U.S. IPOs occurring from 1990 to 2018, a period covering the tech bubble years and the 2007–2008 financial crisis, we examine the existence and magnitude of the link between IPOs and housing, and related hypotheses including the short-term expectations effects, the wealth effects after the IPO lock-up expiration dates, and the long-term effects. Our results provide strong support to these hypotheses. The effects are stronger during the tech-bubble years. In addition, the results are to some extent driven by IPOs in traffic-congested and/or low-affordability cities, and the effects are generally amplified by local housing supply rigidity and IPO stock performance. We find that the overall impact of IPOs on the housing market is economically significant with the most prominent influence linked to the changes in short-term expectations.

Suggested Citation

  • Thanh Nguyen & Arsenio Staer & Jing Yang, 2022. "Initial Public Offerings and Local Housing Markets," Journal of Real Estate Research, Taylor & Francis Journals, vol. 44(2), pages 184-218, April.
    • Handle: RePEc:taf:rjerxx:v:44:y:2022:i:2:p:184-218
    DOI: 10.1080/08965803.2021.2011559
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    Cited by:

    1. Thanh Nguyen & Arsenio Staer & Jing Yang, 2024. "Productivity Shocks of Dominant Companies and Local Housing Markets," International Real Estate Review, Global Social Science Institute, vol. 27(2), pages 203-247.

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