The SpaceX IPO made thousands of employees suddenly rich. But most cannot cash out their shares right away. That hasn't stopped them from shopping for high-end homes in Southern California.
The question is whether this will be a sustainable thing or just superficially inflated prices.
SpaceX stock debuted at $135 per share on June 12. On the first day, it briefly touched $200. Now it trades at $164, still about 21% above the IPO price.
Get your free investing masterclass bonus when you join Market Briefs, our free daily newsletter
The company employs 7,660 people at its engineering and production hub in Hawthorne, California. So not every employee became a millionaire, but many did.
Most SpaceX shareholders cannot sell their pre-IPO shares right away. The company uses a tiered, rolling lock-up period instead of the standard 180-day restriction. This means shares become available in stages over time.
Given its leading role in commercial spaceflight and a valuation exceeding $150 billion, SpaceX's public offering was among the most awaited in recent times. The employee stock ownership program had long been a draw for talent, and the lock-up structure was carefully designed to balance liquidity with stock price stability. As shares gradually become available, the newly minted millionaires will be able to realize their gains over time, potentially fueling sustained demand for luxury real estate in Southern California.
Many of these employees have been with the company for years, accumulating stock options that became valuable only after the IPO.
Real estate agents in Southern California are already seeing interest. "People are starting to look, and most will spend $5 million or more," a real estate broker told the LA Times.
Data from the California Association of Realtors shows that California's median single-family home price is $930,260, the highest in the nation, with Los Angeles County's median around $999,000. But these new buyers are not looking at median homes. Another agent told the LA Times: "I think real estate agents are feeling optimistic. I think there will definitely be an uptick, but I don't know if it will be a sustainable thing. There might be some superficially inflated prices."
According to Paul Habibi, a UCLA lecturer and real estate expert, the full housing market effect will take several months, as he told the LA Times. The lock-up period means many of these millionaires cannot spend their wealth yet. But the anticipation alone could push prices higher in desirable coastal neighborhoods.
Subscribe to Market Briefs, our free daily newsletter, and claim your bonus investing masterclass