So Far, Facebook IPO Has Had No Significant Impact On Housing Market Near HQ

Jun.12.12 | About: Facebook (FB)

Last week, Zillow (NASDAQ:Z) published an infographic on its blog site purportedly describing the impact of the Facebook (NASDAQ:FB) IPO on home listings in the local neighborhood of its Menlo Park headquarters (see Millionaire's Row: How Did Facebook's IPO Affect Silicon Valley Real Estate?). The summary caught my attention:

"To illustrate the Valley's real estate boom, we here at Zillow along with the creative minds at Visual.ly created an infographic highlighting the median home values in Facebook's hometown, Menlo Park, and the surrounding cities, the rise in the percent of million dollar listings during the 3+ month time period between the IPO filing and IPO (it nearly doubled in FB's hometown!), and fun facts comparing how many Menlo Park homes you can get for $1M around the country."

However, even a casual glance at the infographic makes one doubt there was any impact at all. Facebook filed its IPO in early February, typically one of the slower months for the housing market, even in the temperate Bay Area. Facebook launched its IPO in May, just as the housing market is typically in high gear for Spring sales.

Sure enough, the graphic shows that in 2011, the rise in million-dollar listings was similar to this year's rise in the 3.5 month period. This similarity is actually quite fortuitous. On a year-over-year basis, the percentage of million dollar listings was much lower this year compared to 2011 until early May when listings soared from about 40% to 50% of all listings before dropping sharply at the end of the month.

Zillow also offers up the nearby high-rent districts of Palo Alto and Burlingame for comparison. Again, looking at the charts there is no obvious reason to think that the filing of Facebook's IPO had anything to do with the changes in million-dollar listings.

In Palo Alto, January (pre-IPO filing) was a much stronger month this year than in 2011. Last year, as little as 40% of listings were for $1M or more whereas this year 65% or so was the floor. These difference gradually disappeared during February. In the final weeks before the FB IPO, this year's listings were about 20% higher.

In Burlingame, we see almost no difference between 2011 and 2012 until May when this year's million-dollar plus crop soars.

So, even if my blinders focused solely on May's performance, I would be hard-pressed to say that there must be some common force driving million-dollar listings in each market. Slapping the headline of the Facebook IPO is a great way to attract attention to this story, but there is no real evidence provided in these data.

Perhaps a real impact will appear once Facebook employees are able to cash in on their paper wealth. However, after observing their stock dive almost continuously since the IPO, most employees may be a little more hesitant about signing on the bottom line for a home that requires future wealth generation to maintain the big monthly mortgage payments.

This piece at least did not pander to the rampant negativity that has seized the press about Facebook (for example, see Reporting On Reuters Facebook Poll Fashioned To Feed The Fear), but that is still no excuse for poor data analysis.

Full disclosure: Long FB.