Tuesday, March 19, 2013

Do Google, Apple and Facebook Stock Prices Affect the Market?

Google is the darling of the stock market right now at $808 from a 52 week low of $556!
Apple went from $700 a share to $450 today in less than one year.
Facebook stock opened at $38 and is now at $26 per share.

How does this affect the real estate market?

Silicon Valley is healthy. There are some winner companies and some losers (there always has been). There are winner stock bets and losers. These are not always related.

The personal residence market is hot for the most part. Although I would bet that over $2,000,000 the market is hesitant.  There have to be Apple employees rethinking their net worth over this year's steep decline.  Are Facebook employees feeling the pinch?  That all depends on whether they evaluated their gains from $38 or from $0.  I expect some will be selling now to lock in their gains at $26 and many more will be holding tight - expecting growth over the next few years.  Regardless, it will dampen the flow of cash into real estate (nice homes).

And the investment market???

Let's assume less exuberance and some conservation:

1. The single family home market will taper off - meaning lower demand/prices for SFRs. Which in turn makes the investment cash flow better since rents will maintain the same levels.
2. Silicon Valley economy still very healthy - high demand for the tech workforce - so apartment buildings will not be affected by SFR demand or lack of it.
3. Retail - not to be affected much - household expenditures are not impacted by new worth of stock portfolios much. Household spending is linked to monthly household earnings.
4. Industrial - healthy market in Silicon Valley - hard to find space for many larger and mid-size users.
5. Office - Not as strong as Industrial.  Overall, still healthy and not tied to household net worth.

Overall, the investment market will do well and not feel the impact of household wealth fluctuations via high flying and low flying stocks.  What say you?

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