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23

All Politics is Local: Blue States Beat Out Red States in Home Values

By: Stan Humphries, VP, Data & Analytics | July 23, 2007 |

Ready for some more Internet history? If so, tune into CNN (or at CNN.com) tonight for the first-ever CNN-YouTube debate where the Democratic candidates will field questions sent in by regular ‘ol users — citizens of the U.S.! — via YouTube. (The Republican candidates will face the same procedure next week.) There is a lot of speculation about how things will go; will the candidates gang up on Hillary? Will we see a new side of some of the candidates in the more relaxed setting? Whatever your political leanings, there is no denying the Internet is changing politics and perhaps how this election will go.

With this election top of mind for many, we here at Zillow started thinking about how politics impacts our world of real estate. At the risk of re-opening old wounds, we took a look at the 2004 presidential election, in which Republican incumbent George W. Bush squared off against Democratic challenger John Kerry. As we know, Bush won the election with 51% of the popular vote and carried 31 of the 50 states.

As the Republican Party is often associated with wealthier, more business-oriented interests, one might expect that the states that went for Bush were also wealthier in terms of real estate values. Surprisingly, that’s not the case.

According to Zillow’s Zindex (median Zestimate or the middle estimated home value), the Red states (pro-Bush) have substantially lower home values than do Blue states (pro-Kerry). Red states had a Zindex of $190,323 vs. a Zindex of $323,952 for the Blue states as of the first quarter of 2007 (see Table 1 for details by state). In other words, while Red states were on the winning side of the election, the Blue states are on the winning side in terms of real estate values, and by a substantial amount.

One can see this same pattern when looking at the relationship between the percentage of the popular vote for Bush and the state-by-state Zindex chart. Here, the higher the Zindex for a state – or, the greater the value of homes – the fewer people within the state voted for Bush in 2004. The correlation between the Zindex and Bush’s share of the popular vote is -58%, indicating that the two measures are fairly inversely related.

Of course, homeowners in the Red states do have one thing to crow about: real estate values in their states have appreciated faster since the 2004 election than home values in the Blue states. The average quarterly appreciation rate in the Red states since the fourth quarter of 2004 has been 2.27% vs. only 2.05% for the Blue states. While former Speaker of the U.S. House of Representatives Tip O’Neill may not have had home values in mind when he famously declared that “All politics is local,” there certainly seems to be something to it in terms of the Red state – Blue state real estate divide.

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Comments

15 Comments so far

  1. Greg Swann on July 23, 2007 2:45 pm

    Ack!

    You folks are scary.

    As the Republican Party is often associated with wealthier, more business-oriented interests, one might expect that the states that went for Bush were also wealthier in terms of real estate values. Surprisingly, that’s not the case.

    No, one would expect that states that went for Kerry would have stricter zoning, in the main, along with other onerous regulations on the use of the land. Home values tend to be higher where the political burdens on home-building are greater. Red state have fewer land-use regulations, in general, so they have cheaper homes.

    Welcome to the real estate business!

  2. Todd Carpenter on July 24, 2007 2:53 am

    Associating the Republican Party with “wealthier, more business-oriented interests” is something I’d only expect someone from a blue state to do.

    Anyway, average statewide home values are largely a factor of the percentage of the urban to rural population. States with the highest per capita of urban housing are the ones with the highest average value. Urban homes are subject to the stresses Greg mentioned above. By co-incidence, liberals gravitate to urban areas while conservatives gravitate to rural areas.

    Breaking down the red vs blue is far more revealing when it’s done on a county by county basis. Google “bush versus kerry by county” and check out the image results to see what I mean.

  3. Greg Swann on July 24, 2007 7:39 am

    Todd is correct. And if you look county by county or, even better, by voting precincts, I think you should find a very strong correlation between relative blueness and land-use restrictions (and regulation of commerce generally). FWIW, I would expect NIMBYism to be strongly correlated with wealth, ignoring political party affiliation altogether. Incidentally, birth rates can be compared by red and blue voting patterns, as well, suggesting, first, that voting red is strongly correlated with larger families, and, second, that the red states will continue to out-poll the blue states, gaining more Congressional and Electoral College representation with each new census. Because of all that, I would expect (purely as a blue-sky prediction) that red states would have a greater volume of real estate transactions per head than blue states.

  4. Amy B on July 27, 2007 1:55 pm

    fwiw… turns out YouTube received 3x more video submissions for P. Diddy’s new assistant than for this week’s debate. Sad…
    http://tinyurl.com/37dhzc

  5. Sacramento Real Estate Voice on July 28, 2007 9:02 pm

    Stan,
    Very comprehensive data you have there.

    Never thought about the blue states and the red states in terms of Real Estate and the election.

    It is also interesting to see the census for each of the states and the distribution of the parties based on the projection of that census.

    Thought provoking! And great comments, I might add.

    -Gena Riede

  6. Blue States Have Higher Home Values for a Reason » The Deets - Ed Kohler's Blog on July 29, 2007 6:18 am

    […] All Politics is Local: Blue States Beat Out Red States in Home Values According to Zillow’s Zindex (median Zestimate or the middle estimated home value), the Red states (pro-Bush) have substantially lower home values than do Blue states (pro-Kerry). Red states had a Zindex of $190,323 vs. a Zindex of $323,952 for the Blue states as of the first quarter of 2007 (see Table 1 for details by state). In other words, while Red states were on the winning side of the election, the Blue states are on the winning side in terms of real estate values, and by a substantial amount. […]

  7. Real Estate Bloggers on July 30, 2007 1:15 am

    […] Below is a snippet of his blog article All Politics is Local: Blue States Beat Out Red States in Home Values […]

  8. Carnival of Real Estate #52 - Zillow Blog - Real Estate News and Analysis on July 30, 2007 9:37 am

    […] Sacramento Real Estate Voice: Stan, Very comprehensive data you have there. Never tho… […]

  9. Trulia Blog » Carnival of Real Estate on July 30, 2007 2:36 pm

    […] Humphries of Zillow with his post, ‘All Politics is Local: Blue States Beat Out Red States in Home Values’ Go take a look at these and other great posts and don’t forget to collect $200* when you pass […]

  10. Carnival of Real Estate on July 30, 2007 7:51 pm

    […] Zillow’s Stan Humphries adds another chapter to the “Red State vs. Blue State” deb….  Some interesting rebuttals to Stan’s arguments appear in the comments. […]

  11. Local Politics and Local Real Estate » The Real Estate Blog by Cari McGee on July 30, 2007 8:45 pm

    […] From Zillow comes this fascinating piece of research about property values and voting patterns from the 2004 Presidential election.  It’s true that our area has lower property values than the western side of Washington, but we are appreciating at an even higher rate than that cited in the post.  Our area appreciates at a rate between 3% and 5% a year, on average.  Maybe our red side is trying to catch up with the blue side?  That makes for a pretty healthy market.  And that makes for some pretty happy Tri-Cities homeowners, regardless of political affiliation. Social media is great! Please share this post with others.These icons link to social bookmarking sites where readers can share and discover new web pages. […]

  12. 52nd Carnival of Real Estate: Monopoly on July 31, 2007 8:36 am

    […] All Politics is Local: Blue State Beat Out Red States in Home Values […]

  13. Tom Armstrong on July 31, 2007 11:09 am

    Full Disclosure: I’m a Red-Stater at heart, living in the decidedly Blue state of California.

    Turn the original proposition around and examine it from the standpoint of freedom and opportunity.

    Where land use restrictions are lowest, home prices tend to be lower (supply vs demand), and affordability tends to be higher (opportunity). Homes in Jackson, MS (or a multitude of other cities “in the middle”) can be had for 20% (or less) the cost of an equivalent home on either coast. Yet average wages there, while lower, are only a percentage lower (typically 20-30%), not an order of magnitude.

    Average people working average jobs in Red States, can afford average homes in Red States. Only the elite, the trust fund babies, or the relatively fortunate few in the blue states can afford to own, and the liberals who dominate local politics on both coasts are determined to keep it that way.

    I would love to see these numbers re-crunched to examine and correlate ‘affordability’.

  14. Tom Armstrong on July 31, 2007 11:11 am

    BTW, congrats on your selection in the Carnival of RE Blogs!

  15. Incredible Agent on July 31, 2007 4:03 pm

    Does this mean Democrats pay more for their homes than Republicans? If that’s the case, I’m glad I live in a red state. Urban areas=higher population, higher welfare rates, higher home prices & a higher percentage of democrats.

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