Tags: liberal | cities | middle | class | economy

Economists: Liberal Cities Least Affordable for Middle Class

By    |   Tuesday, 11 November 2014 06:29 PM

Liberal cities are the least affordable for middle-class homeowners, real estate experts say.

"Blue markets have lower affordability, lower homeownership, and greater income inequality," Trulia chief economist Jed Kolko writes in a recent article for the big realty company.

Kolko divided the largest cities into 32 "red" city areas, including Houston, where Mitt Romney got more votes than President Barack Obama in 2012, 40 "light-blue" markets where the president won by fewer than 20 points – like Austin, Texas – and 28 "dark-blue" metropolitan areas where Obama won by more than 20 points, like Los Angeles, San Francisco and New York City.

All three housing groups matched in their declines in the recession, and rises in the recovery – but affordability was a bigger problem in the bluest of cities, the survey finds.

"Even after adjusting for differences of income, liberal markets tend to have higher income inequality and worse affordability,” Kolko told the Atlantic, which reported on the disparity just before the midterm elections.

Another study showed a similar trend, the Atlantic notes.

In 2010, UCLA economist Matthew Kahn published a study of California cities in the Journal of Urban Economics that found liberal metropolitan areas issued fewer new housing permits — and that as California cities became more liberal, they built fewer homes.

"All homeowners have an incentive to stop new housing," Kahn told the Atlantic, "because if developers build too many homes, prices fall, and housing is many families' main asset."

"But in cities with many Democrats and Green Party members, environmental concerns might also be a factor," he added. "The movement might be too eager to preserve the past."

Kahn adds liberals may be more averse to new housing development that would help lower-income families as the result of "good intentions gone bad."

"Developers pursue their own self-interest," Kahn tells the Atlantic. "If a developer has an acre, and he thinks it should be a shopping mall, he won't think about neighborhood charm, or historic continuity. Liberals might say that the developer acting in his own self-interest ignores certain externalities, and they'll apply restrictions. But these restrictions … add up, across a city, even if they’re well-intentioned. The affordability issue will rear its head."

Affordable housing is an issue across the country.

For example, Trulia found among the 100 largest U.S. city areas, 63 percent of homes are "within reach" for a middle-class family. But among the 20 richest city areas, just 47 percent of homes are affordable, including a national low of 14 percent in San Francisco, the Atlantic reports.

The firm defined "within reach" as a for-sale home with a total monthly payment — including mortgage and taxes — less than 31 percent of the city's median household income.

If you line up the country's 100 richest city areas from 1 to 100, household affordability falls as household income rises, the Atlantic reports.

In general, richer cities have less affordable housing, the Atlantic reports.

"Democratic, high-tax metropolitan areas... tend to constrain new development more," economist Albert Saiz concluded in 2008, the Atlantic reports, and "historic areas seem to be more regulated." He also found that cities with high home values tend to have more restrictive development policies.

© 2019 Newsmax. All rights reserved.

1Like our page
Liberal cities are the least affordable for middle-class homeowners, real estate experts say.
liberal, cities, middle, class, economy
Tuesday, 11 November 2014 06:29 PM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
© Newsmax Media, Inc.
All Rights Reserved