Corporate Relocation and Housing Market Spillover

58 Pages Posted: 19 Oct 2020

See all articles by Maggie Hu

Maggie Hu

The Chinese University of Hong Kong

Desmond Tsang

McGill University - Desautels Faculty of Management

Wayne Xinwei Wan

University of Cambridge - Department of Land Economy

Date Written: August 25, 2020

Abstract

This study investigates the spillover effect of corporate headquarters relocation on the local housing market. Using a comprehensive database to identify corporate relocation events in the U.S. from 1994 to 2017, we show that moving a corporate headquarters into a district is significantly associated with housing price appreciation in the district. The growth in housing prices for districts with a corporate headquarters relocation is 10% higher than in those without. Moreover, housing prices increase in the year before the relocation, which suggests the presence of a speculation and expectation effect. Housing prices increase further until 2 years after the relocation, which demonstrates the prolonged impact of corporate relocation on the housing market. The cumulative effect over the period results in more than 30% higher growth in housing prices for districts with a corporate relocation. Further, we find a significant spatial spillover effect of corporate relocation on nearby districts’ housing markets up to 15 miles. We next examine the channels through which corporate relocation affects housing prices, including the relocating firm’s employee base, firm activity, and agglomeration economies. Lastly, we observe a marginally negative effect as a result of a headquarters moving out of a district. Overall, our study indicates that corporate relocation exhibits significant positive spillover on the local housing market.

Keywords: Corporate Headquarters Relocation, Housing Market, Spatial Spillover, Housing Price Speculation & Expectation, Local Economic Activity

JEL Classification: D22, R30, R31

Suggested Citation

Hu, Maggie and Tsang, Desmond and Wan, Wayne Xinwei, Corporate Relocation and Housing Market Spillover (August 25, 2020). Available at SSRN: https://ssrn.com/abstract=3683630 or http://dx.doi.org/10.2139/ssrn.3683630

Maggie Hu

The Chinese University of Hong Kong ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Hong Kong, N.T.
Hong Kong

HOME PAGE: http://sites.google.com/site/maggiehuresearch/research

Desmond Tsang

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

Wayne Xinwei Wan (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

HOME PAGE: http://xinweiwan.weebly.com

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