Liberal markets face bigger housing challenges

by MPA04 Nov 2014
Happy Election Day! In honor of the holiday, digital realtor Trulia has studied the 100 largest U.S. metros and found that longer-term housing issues like declining affordability, low homeownership and rising inequality play out differently in Democratic- and Republican-leaning areas.

Trulia categorized the metros as red (Republican) or blue (Democratic) depending on their 2012 presidential vote. In 32 metros—the red markets—the Republican candidate, Mitt Romney, got more votes than the Democrat, President Obama. These include places like Houston, Cincinnati and Salt Lake City.

In 40 light-blue markets, including St. Louis, Austin and Buffalo, Obama beat Romney by less than 20 percentage points. And in 28 dark-blue markets, including Los Angeles, New York and San Francisco, Obama’s margin exceeded 20 points.

“When we looked at housing trends in these metros, we found that the housing crisis and recovery affected red and blue markets similarly. But today’s pressing housing issues are more severe in blue markets,” said Jed Kolko, chief economist at Trulia.

The digital realtor found that affordability is a bigger issue in the blue markets than the red. Trulia data showed that nine of the 10 bluest markets had a median asking price above $130 per square foot in September. However, none of the 10 reddest markets did. San Francisco topped the list at around $600 per square foot, followed by Oakland, California, ($342) and New York City ($320).

Looking across all 100 largest metros, the correlation between price-per-square-foot and the 2012 vote margin was high (0.63), according to Trulia. In fact, the only expensive red market was Orange County, California, at $363 per square foot. There was a huge drop-off to the next most expensive red market—North Port-Bradenton-Sarasota, Florida, — at $150 per square foot.

Sure, households in blue markets tend to have higher incomes. But those higher incomes are not enough to offset higher home prices, according to Kolko. Trulia’s middle-class affordability measure, which reflects the share of homes for sale within reach of a median-income household, is significantly lower in bluer markets. Blue markets also have lower homeownership and greater income inequality than red markets.

“The point is not that Democrats cause expensive housing, lower homeownership, or greater inequality. Determining whether and how the political views of voters or their elected officials affect local housing markets is the stuff of scholarly research, not short blogposts,” wrote Kolko. “But because blue markets are less affordable, have lower homeownership and have greater income inequality, political leaders in Democratic-leaning and Republican-leaning metros may push for different policies.”

You might also like: How the housing market in your state determines who will win the mid-term elections


Should CFPB have more supervision over credit agencies?