Sunday, August 31, 2008

Restricting Housing - Spells Liberal Democrat Domination

Source: Political Calculations. We've been saying this for two years on Daltonsbriefs and Porter County Politics, if you arbitrarily restrict housing for reasons of environmentalism or "impact" politics, you run the risk of negative equity and eventually highly liberal policies that lead to urban decline and slums. In general liberal housing policies can be shown to have caused the bubble and the foreclosure crisis that we now face in some markets.

The first map, showing the percentage of homeowners with negative equity in April-June 2008 for U.S. metropolitan statistical areas, was created by Hannah Fairfield of the New York Times as a reference for an article about the aftermath of the housing bust in the central valley of California:

Percentage of Homeowners with Negative Equity, April-June 2008, Source: New York Times

The second map, which was created by David Leip, shows the degree to which voters in the U.S. voted in favor of a particular political party, by county. Note that in this map, blue represents voter preference for the Republican Party, while red indicates voter preference for the Democratic Party:

U.S. Political Party Preference Map by County, 2005, Source: US Election Atlas

Here's how Jim interpreted the apparent correlation:

In general — please note that I said, in general — the areas that have the highest levels of negative equity are the areas that vote Democratic, that elect Democrats to state legislatures and city councils.

There are exceptions. The heavily black areas along the Mississippi river and the Hispanic areas along the southern border vote Democratic, but do not have problems with declining equity (or even equity, some might quip). But on the whole the declining equity map is also a map of Democratic strongholds, Los Angeles and other urban areas on the West coast, the Twin Cities, Chicago, Detroit, New York, and so on.

Allowing for those exceptions, the negative equity map looks like a map of Obama's supporters, except for southern blacks.

Why might this be so? Here's my speculation, and it is no more than speculation, but it is consistent with a number of academic studies. Democrats, especially culturally left Democrats (latte-sipping, arugula-nibbling Democrats, as opposed to beer-drinking, hot-dog-eating Democrats), regulate housing markets, causing shortages. These shortages cause prices for homes and condominiums to rise rapidly. Once prices have been rising rapidly for several years, many begin to believe that they will always rise, and soon you have a bubble, with speculators trying to make quick profits, and home buyers trying to beat price increases. Eventually, the bubble pops, the prices drop, and the foreclosures start.

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