Home Prices and the Stock Market

Posted in Real Estate, Strategic Allocation


Homes typically represent a large fraction of investor wealth. Are there reliable relationships between U.S. home prices and the U.S. stock market? For example, does a rising stock market stimulate home prices? Do falling home prices point to offsetting liquidation of equity positions. Do homes effectively diversify equity holdings? Using quarterly levels of Robert Shiller’s Nominal Home Price Index and the S&P 500 Index from the end of 1952 through March 2013 (about 60 years), and annual median sales prices for existing homes from RealEstateABC.com and the National Association of Realtors spanning 1968 through 2012 (45 years), we find that: (more…)

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