All Politics is Local: Blue States Beat Out Red States in Home Values
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.
Dr. Stan Humphries is a real estate economist and real estate expert for Zillow. Stan is in charge of the data and analytics team at Zillow, which develops housing market data for most major metropolitan statistical areas in the U.S., and provides economic research for current real estate market conditions. He helped create the algorithms for the popular Zestimate® home value and the Zillow Home Value Index (ZHVI).