Want to Find a Home You Can Afford? If You're in the Middle Class, Head Somewhere Flat and Conservative

Their residents might be more likely to lament wealth inequality, but America's most liberal cities have a big, ironic problem: middle-class Americans can't afford to live there.

It turns out, regulation doesn't come cheap.

Jed Kolko, chief economist for the real estate website Trulia, made the connection between politics and housing prices clear in a blog post on the subject earlier this week.

He included one simple chart that graphically depicted how much more expensive, on average, liberal cities are than conservative cities.

Image via Trulia

There are a few outliers — Detroit is cheap and liberal, Orange County is expensive and conservative — but by and large, Kolko wrote, conservative towns are a lot less pricy.

"The [data] show that none of the 10 reddest markets had a median asking price per square foot above $130 in Sept. 2014," he wrote. "But nine of the 10 bluest markets did."

Why?

Derek Thompson at the Atlantic explored the problem.

Geography was one explanation Thompson examined, noting that many liberal cities, like San Francisco, are crammed between mountains and oceans, creating limited space for housing...

San Francisco, a city of hills by the ocean. (Image via David Yu/Flickr)

...while more conservative cities like Dallas are surrounded by miles and miles of flat land, which keeps the costs of building new housing very low.

Flat, flat Dallas. (Image via John Krzesinski/Flickr)

According to Trulia's data, potential home buyers in the Dallas-Fort Worth metro area face a median asking price of $94 per square foot.

In San Francisco, the median asking price is astronomically higher: $613 per square foot.

But geography alone might not explain the disconnect between liberal and conservative metro areas.

Thompson quoted the economist Albert Saiz who wrote in 2008, "Democratic, high-tax metropolitan areas ... tend to constrain new development more," and noted that, "historic areas seem to be more regulated."

UCLA economist Matthew Kahn echoed Saiz' conclusion, telling Thompson that the pro-regulation instincts of liberals can have the unintended consequence of raising the costs of building so high that new units don't get built — and the middle class remains unable to buy homes.

"All homeowners have an incentive to stop new housing, because if developers build too many homes, prices fall, and housing is many families' main asset," Kahn said. "But in cities with many Democrats and Green Party members, environmental concerns might also be a factor. The movement might be too eager to preserve the past."

Overall, Trulia's analysis found that the most affordable homes are in the Midwest, with five of the 10 most affordable metro areas being located in Ohio.

California, New York and Hawaii held the most expensive metros.

Nationwide, 63 percent of homes in the 100 largest U.S. metros were "within reach" of an average family, Trulia found (defining "within reach" as "costing less than one-third of a family's monthly income).

But in the 20 richest metros, less than half of homes were "within reach" for a middle class family.

—

Follow Zach Noble (@thezachnoble) on Twitter