With the economy topping voters’ list of national priorities in the upcoming mid-term congressional elections, we thought it would be interesting to do a quick assessment of the degree to which one the biggest economic issues – the housing bust and the associated epidemic of negative equity and foreclosure – is affecting local races.
With that in mind, Yeng Bun put together an interactive tool showing each congressional district and the decline in home values seen in that district since market peak. Sounds easy but the hard part was getting the boundaries for the all the congressional districts, assigning each of Zillow’s 70 million homes with a Zestimate to a district and then computing a Zillow Home Value Index (ZHVI) for each district. Fortunately, Yeng’s done this work so you don’t have to.
So, is the fall in home values affecting local races? As with all things political, the answer is not entirely straightforward. Clearly, the economy is foremost in most voters’ minds this election cycle. A recent CNN/Opinion Research Corporation poll found that the economy was identified as the most important issue facing the country by 49% of respondents (poll fielded September 21-23 to 1,010 adults nationwide with a margin of error of +/- 3%). The next closest issue was the federal budget deficit which was listed as most important by 11% of respondents.
In terms of which party – Democrats or Republicans – has more exposure to home value declines, our data indicates that the parties are roughly equal on this measure. Congressional districts with a Democratic incumbent have seen an average decline in home values since the market peak of 24.1% versus a 25.1% decline in districts with a Republican incumbent.
But since most districts are relatively safe (due to redistricting), perhaps the more relevant analysis is the degree to which there is some relationship between district home value decline and incumbent performance in those districts that are currently hotly contested. To identify contested elections, we turn to the political analysts at NBC (Chuck Todd, Mark Murray, Domenico Montanaro, and Ali Weinberg) who have compiled their Field of 64 races most likely to switch parties in the upcoming elections.
We then pared this list down to those districts in which the current incumbent was running for another term (i.e., we eliminated open seats) based on the logic that, if voters are going to look for someone in the electoral process to punish for home price declines, it’s at least plausible that they will target their ire at their local congressional representative running for another term. We then combined this list with the most recent poll numbers from RealClearPolitics.com for each district and the peak-to-current decline in home values for each district. Below are the seventeen districts that had both recent poll data and ZHVI data.
Figure 1 shows the relationship between home value declines and how the incumbent is faring in the polls. With a broad brush, there doesn’t appear to be a strong relationship between the two. Dropping the two Republican incumbents helps clean up the data a bit (Figure 2) and the logic for doing so is that there are larger partisan effects driving vote preference and we don’t want to conflate these with the relationship between home value declines and incumbent preference.
While it’s not enough data to make a meaningful conclusion (particularly without controlling for a variety of other determinants of vote preference), you can see the semblance of a relationship for the districts where home values have fallen by less than 20% from their peak. In these districts, incumbents in districts where home values have fallen more sharply are doing quite a bit worse than those in districts with smaller home value declines.
What about districts with home value declines above 20%? These five districts are all in the hard-hit areas of Nevada, Florida, Arizona, and Ohio. It could be that different issues are motivating voters in these five districts (for example, illegal immigration). It might also not be a coincidence that these districts are in areas bubbling with Tea Party anger.
Will the status of your local housing market play a role in your decision come November? Join the conversation on the Zillow Blog.