Above Asking

Something happens — but less of it, later, and not in proportion to the stock chart. The most interesting thing in 35 years of numbers is not how much housing moved. It is that whether the Nasdaq had a good year mattered a great deal, and how good that year was barely mattered at all.

A note on scope before anything else, because it changes how you should read every figure below. This article uses county data: the federal home price index for Santa Clara and San Mateo counties. That is Daly City and Gilroy as well as Atherton and Palo Alto. It is the right lens for a regional question and the wrong one for a particular town, which is why the companion piece runs the same question again on 13,371 Palo Alto sales — and gets a visibly different answer.

The running joke

Around here, people like to joke that Peninsula home prices never go down. It’s one reason I named this publication Above Asking.

But if you own a home on the Peninsula, you also have a front-row seat to the stock market. Many local owners and buyers work in tech, and plenty of them are paid partly in stock. When the Nasdaq has a great year, open houses seem to get busier. When it has a terrible one, dinner-party conversation gets a little quieter.

So is that feeling real? Do Silicon Valley stock prices actually move our home prices? I went through 35 years of numbers and three decades of research to find out.

What the economists found first

I’m not the first person to wonder. In September 2000, just as the dot-com bubble was bursting, two economists at the Federal Reserve Bank of San Francisco, John Krainer and Fred Furlong, looked at quarterly data from January 1992 to June 2000 and found that changes in the value of local high-tech companies helped forecast what Bay Area house prices did next. Their estimate: a 10% rise in local high-tech market valuation went with roughly a 1% to 2% rise in house prices over two years. The stocks moved first, the homes followed, and the housing move was much the smaller of the two. They found no such link in Los Angeles or San Diego.

IPOs are the most direct way stock turns into a down payment, so researchers have studied those too. A UCLA study of 720 California IPOs from 1993 to 2017 found that home prices near the company rose an average of 3.3% within one mile between the day it filed to go public and its first day of trading. Within five miles the rise was 1.7%, and within ten miles 1.3%.

In other words, buyers started house-hunting before they could sell a single share. Apparently not everyone waits for the lockup.

A second study, of IPOs across the country from 1998 to 2015, found that home prices near the company got another lift after the lockup ended, when employees could finally sell. Prices climbed even more when the new stock jumped after its debut.

What 35 years of data show

Then I ran my own check. I lined up the Nasdaq’s year-end close from 1990 through 2025 against the federal home price index for Santa Clara and San Mateo counties. Those two counties hold all six towns I watch most closely: Palo Alto, Los Altos and Los Altos Hills on one side of the county line, and Atherton, Menlo Park and Hillsborough on the other. They also hold a great many places unlike any of those, which is the limitation of a county average and the reason for the second article.

Three things stood out.

The relationship showed up more clearly in the following year’s housing data. Not in the same calendar year. Over two years, every 10% the Nasdaq gained went with about 2% more home price growth in Santa Clara County — the same broad shape the San Francisco Fed found a quarter of a century ago, and the same order of magnitude, though their study used different data over a different period and I would not claim the two results are the same finding.

I want to be careful with the word lag, because it invites a sentence I am not willing to write. This is not “stocks rise now, so houses rise next year.” It is an observational pattern in two series that keep time differently — a year-end stock close against an annual average of home sales — and the honest version is simply that the housing response was more visible in the following year than in the same one.

Even the dot-com crash took a while to arrive. The Nasdaq lost 39% in 2000, and county home prices still rose about 11% in 2001, averaged over the year. Santa Clara County then slowed to 0.6% in 2002.

The link is real, but loose. Stocks explain some of the swings in local home prices, not most of them. Mortgage rates, jobs and plain old supply matter too. 2008 is the clearest case: that crash started with mortgages, not tech, and home prices fell anyway.

Direction mattered. Size barely did. The Nasdaq fell in 8 of the past 35 years. In the year after those 8, county home prices rose an average of 1.6%. After the up years, they rose about 6%. That gap — roughly four and a half points — is the real finding, and it is a large one.

What is not there is any extra reward for an extraordinary rally.

Here’s the part that made me laugh. After a year the Nasdaq rose 30% or more, county home prices rose 6.2% the next year. After an ordinary up year, 6.1%. Four or five times the stock return produced one tenth of a point more housing.

So a positive year for tech does appear to matter, and it matters quite a lot. The size of that year is where the relationship stops paying. Tech wealth, in this data, behaves like a tailwind rather than a timetable: it helps, it does not arrive on schedule, and twice the wind does not get you there twice as fast.

The twist since 2022

From the end of 2022 to the end of 2025, the Nasdaq more than doubled. It rose 122%. Housing rose, but nothing like that: the FHFA county index was up 11% in Santa Clara and 7% in San Mateo, and the Case-Shiller index for the San Francisco metro area — a different kind of series, covering a different footprint — rose 6%.

That is three separate measures, and they are worth keeping separate. Two are county repeat-sales indexes; one is a metro index. None of them is a Palo Alto number.

It would be easy to read that gap as proof that tech wealth stopped mattering. I don’t think it shows that at all. It shows that stock wealth does not convert dollar for dollar into house prices, which it never has — and that a great many other things were moving at the same time: borrowing costs, affordability, how much was for sale, who was hiring, and what kind of homes happened to change hands.

Mortgage rates are the counterweight I would bet on, and I want to be clear that betting is what it is. Nothing in this data isolates rates from everything else that was happening.

But county averages hide a lot. They mix a Palo Alto Craftsman with a Sunnyvale condo. The top of the market tells a different story. The Almanac reported that home prices rose 8% in Palo Alto, 9% in Menlo Park and 17% in Atherton in the first eight months of this year. Redfin counted four of the country’s ten most expensive August home sales in the Bay Area, and said the big month “comes as AI wealth drives the region’s housing market.”

So here’s what I think is happening, and I want to be clear that it is a hunch: stock wealth now shows up most in a handful of towns at the very top, while the county averages stay calm. The companion piece is the first test of that hunch, and it comes out in favour of it.

The broad view, and the narrow one

County data is the broad view. It is honest about the region and silent about your street. So I also ran the same question using 13,371 Palo Alto single-family sales — every one in the MLS since 1998 — and the answer changes shape: How closely do Palo Alto home prices follow tech stocks?

The short version, if you only read one line of it: where the county barely distinguishes a spectacular tech year from an ordinary one, Palo Alto distinguishes them sharply, and it is the only one of the two that has actually gone down after a bad year for tech. Atherton, Menlo Park, Los Altos, Los Altos Hills and Hillsborough come after that, once I’ve pulled their records too.

What this means if you’re selling

None of this is a market-timing rule, and I would be uneasy if it were read as one.

A strong Nasdaq is useful context. It is not by itself a reason to sell, and it is not a reason to wait either. If a move is already somewhere on your horizon, the questions that actually decide how it goes are the ones you can answer today: what buyers are doing right now, how much competing inventory is on the market, where rates sit, and how your particular home — its condition, its price band, its presentation — fits what is in front of it.

Waiting for a hoped-for stock-market effect means trading a market you can evaluate today for one you cannot.

A few things that are worth holding on to:

1. Read the Nasdaq by the year, not by the morning. A rough week won’t change who shows up at your open house on Sunday.
2. After a down year for tech, price for a calmer county market. Historically the following year was flat to slightly up out here, with buyers still present and fewer of them bidding against each other. Palo Alto itself has behaved differently, and the companion article has that number.
3. Watch IPO filings rather than lockups. Buyers tend to start shopping when a company files to go public, not when they can finally sell. Worth knowing. Not worth rushing for.
4. Expensive borrowing can drown out a great stock market. Since 2022 a doubling Nasdaq moved the county averages very little. That is a reason to look at rates and inventory alongside the stock chart, not instead of your own situation.

The bottom line

Tech stocks do move Silicon Valley home prices. They do it slowly, more visibly in the following year than the same one, and by a small fraction of the stock market’s swing — and the direction of the tech year matters far more than its size.

So the Nasdaq is worth watching if you own a home here. It tells me something about the environment. It cannot tell me when your house should go on the market.

That part takes looking at your house, your street and this month’s competition. I’m glad to do that with you, in English or 中文. No pressure, and no stock tips.

Ask me what today's market means for your home.

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Prefer to text? Text Maggie at 650.709.5588.