Housing Recovery In Red States Trounces Blue States
In the past two years, the housing markets have recovered faster in red states than in blue, a new analysis reveals.
According to data from RealtyTrac, most housing markets in the U.S. (52%) are better off now than they were two years ago, though 11% are worse off and for the 36% remaining it’s merely a toss-up. Put simply, to be declared “better off,” a majority of the residents in that state had to live in counties that exhibited at least three of these five factors (all of which have a strong influence on housing health): significantly fewer foreclosure starts; higher median home prices; a percentage of homeowners who are severely underwater on their mortgages that was lower than the national average; significantly lower unemployment; and be counties where home prices didn’t rise so quickly that many average people could no longer afford to purchase a home.
Politics may play a role: How well your state’s housing market is performing has something to do with whether you live in a so-called red state or a blue state, which are considered either strongly Republican or Democratic, respectively, according to a custom analysis that RealtyTrac ran for MarketWatch. Indeed, when compared to two years prior, the housing markets in 53% of the blue states in America (10 of 19 analyzed) were better off, while fully 78% of the housing markets in red states (18 of 23 analyzed) were better off.
The RealtyTrac study compared the housing markets in 1,547 total counties — this represents 77% of the total U.S. population — in August 2012 vs. August 2014. Colorado, Virginia, Florida, Ohio and Nevada were considered purple states (based on data on how they voted in the last four presidential elections) and thus excluded from the red/blue state analysis (though not the overall housing market analysis); Delaware, Hawaii and South Dakota did not have sufficient data for inclusion.
While the reasons for red states’ dominance in the “better off” category are unclear (though we bet Democrats and Republicans each have their own explanations), Daren Blomquist, the vice president of RealtyTrac, says that it may have to do with how the blue and red states dealt with the foreclosure crisis. This “fits with the storyline of many of the blue states taking a more pro-active/aggressive stance toward foreclosure prevention, while many of the red states have taken a more laissez-faire approach,” he says. Indeed, in blue states we tended to see more legislation and proactive court rulings around the foreclosure crisis that slowed down the foreclosure process in an attempt to protect homeowners, he explains.
In other words, “those red states were hit hard early on by foreclosures but now most of the foreclosure problem has cleared — which has also allowed home prices to rebound faster,” he explains. “Meanwhile in many of the blue states we are still seeing increases in foreclosure activity, which makes those states worse off on the foreclosure front; plus the lingering foreclosures are weighing down home prices, and we’re not seeing as rapid home price appreciation in many of those states.”
Of course, he says, it could be largely due to something else entirely: “The red states tend to be more rural and were not as impacted by the housing bubble as the more urban and suburban housing markets, which tend to be more heavily in blue states.”