Abstract
To what extent do capital market factors affect home prices? Thispaper examines quarterly changes in median sales prices forhomes across more than 3,000 U.S. ZIP Codes in 203metropolitan areas from 2001 to 2006 to investigate home pricesensitivity to returns on U.S. stocks and bonds. The findingsreveal that home-price changes are positively related to returnson stocks and bonds, on average. They also show that homeprices in higher priced ZIP Codes have greater exposure tocapital market risk factors, consistent with higher levels ofwealth and capital market participation, on average, amongowners of higher priced homes.
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