Share this on WhatsAppBy Roznah Abdul Jabbar It could be uncharacteristic to categorise housing markets according to political alignments of the cities, but economist...

By Roznah Abdul Jabbar

It could be uncharacteristic to categorise housing markets according to political alignments of the cities, but economist Jed Kolko says that there is a correlation between political leaning and the availability of affordable housing.

Based on a research in United Stated cities, Kolko claimed that the affordable housing availability differs significantly between large cities in conservative and liberal states, with blue states showing a significant lack of affordable housing.

Kolko deduced the correlation by categorising the 100 largest cities as red (conservative) or blue (liberal) depending on their 2012 presidential vote.

32 “red” cities include Houston, Cincinnati, and Salt Lake City; 40 cities categorised as “light-blue” (democratic) markets, include St. Louis, Austin, and Buffalo; while 28 “dark-blue markets”, include Los Angeles, New York, and San Francisco.

By comparing the electoral data with the cities’ respective housing trends, Kolko and his team at Trulia, a US-based property listing portal, found that housing issues are most severe in blue democratic markets.

When comparing red and blue housing markets, there appears to be a significant difference with regards to affordability. Not one of the 10 reddest markets has a median asking price per square foot above US$130 (RM482) in Sept 2014, unlike nine of the 10 bluest markets.

Kolka said that most of the red cities have the lowest median asking prices, while most blue cities’ prices are around twice as much. Blue cities also show lower home ownership and income inequality.

Additionally, when looking at how much people pay as a percentage of their income, the theory holds up. In Los Angeles, San Francisco, and New York, people spend an average 47%, 40.7%, and 39.5% of their income on housing, which is well above the 30% affordable limit.

In red states such as Houston and Cincinnati, the current percentage of income spent on rent is below the 30% national average at 29% and 26% respectively.

Kolko left the reasoning behind the correlation between affordable housing availability and liberal political leaning open for interpretation.

UCLA economist Matthew Kahn suggested that the housing dearth in democratic cities is due to other concerns that weigh into the democratic platform.

He said that liberal development restrictions such as historic preservation, environmental preservation, and ceiling heights add up across a city, and affordability bears the cost of these restrictions.

According to Ilya Somin, a Professor of Law at George Mason University, in general, richer cities have less affordable housing.

Somin, who does research on constitutional law, property law and popular political participation, said that Kolko’s theory isn’t an outlier as there is a deep literature tying liberal residents to illiberal housing policies that create affordability crunches for the middle class.

“Although all three housing groups face similar declines in the recession and similar bounce-backs in the recovery, affordability remains a bigger problem in the bluest cities,” Somin said.

He said that the high cost of housing in liberal cities is in large part caused by highly restrictive zoning rules, which in recent years have caused many African-Americans and others to move away from major north eastern cities to areas with less restrictive zoning and lower housing prices in the south and southwest.

Top 10 most liberal and most conservative cities of US

Top 10 most liberal and most conservative cities of US

Why do liberal cities enact policies that often make housing unaffordable for the poor and much of the middle class?

“The cynical explanation is that ‘limousine liberal’ voters only pretend to care about affordable housing for the poor and the middle class, but in reality adopt zoning restrictions to keep home prices up and prevent the riffraff from living near them,” Somin said.

He said that such motives may be present in some cases, but, on most issues, there is little correlation between political views and measures of narrow self-interest.

“It is therefore likely that most voters in liberal cities do genuinely care about affordable housing and the interests of the poor,” he said.

He said that like their conservative counterparts, most liberal voters don’t think carefully about the possible negative side effects of their preferred policies.

“Just as most of them do not realise that rent control diminishes the stock of housing, they also may not realise that zoning restrictions diminish it, and thereby increase housing costs,” Somin added.

Somin pointed out that conservative voters have their own characteristic patterns of economic ignorance.

“Both sides tend to ignore, or even blatantly misinterpret, evidence that cuts against their preferred views – especially if the evidence or the reasoning behind it is counterintuitive,” he noted.

He said that to a considerable extent, the high cost of housing in liberal cities is yet another negative effect of widespread political ignorance.

“Well-meaning, but ill-informed voters are not exclusively to blame, of course. In many cases, development restrictions are also favoured by influential narrow interest groups, such as developers with strong political connections,” he said.

He said unlike ordinary voters, who tend to be rationally ignorant about public policy, small organised interest groups have strong incentives to pay close attention to policies in which they have a major stake.

As is often the case with perverse regulatory policies, Somin said excessive zoning is in part the product of a “baptist-bootlegger” coalition. Well-meaning, but badly misguided Baptists supported Prohibition out of genuine moral concern about the harmful effects of alcohol.

Somin believes housing policy in liberal cities is influenced by a similar implicit unholy alliance between well-meaning progressive voters and unscrupulous economic interest groups.

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