Facebook, a renowned social networking platform, is now not merely a tool for garnering likes and comments; it can actively influence the price of a home during the sale process, according to analysts.
The Social Impact on Home Prices
Residence prices have the potential to escalate through social networks, akin to a viral phenomenon, with friends on Facebook significantly impacting what one might earn from selling a home. Researchers from the United States National Bureau of Economic Research have uncovered that individuals whose friends reported a rise in residential prices were much more inclined to pay a premium for their homes.
A study conducted by Michael Bailey, a Facebook business analyst, along with Ruiqing Cao from Harvard University, and both Johannes Stroebel and Theresa Kuchler from New York University’s Stern School of Business, merged Facebook audit data with public records concerning residential purchases.
Methodology of the Study
According to the New Zealand Herald, the researchers analyzed the influence of friends who were "geographically separated" yet still connected through social networks to assess their responses to price changes. The analysis revealed that when people had long-distance friends from areas where residential prices surged by 5% above the average over the past two years, they were significantly more likely to buy a home, increasing their likelihood by 3.1%. Furthermore, they were willing to pay 1.7% more for a house that was, on average, 3.3% larger.
Scale of the Findings
This case was quite pronounced, correlating data from approximately 520,000 housing purchases in the Los Angeles area spanning back to 1993 with the social media activity of various home buyers. The study emphasized that only those whose friends experienced substantial increases in residential prices were more confident in their property investments.