A popular post-election narrative says that voters who have not participated in the recovery during this economic cycle felt disenfranchised and therefore were more likely to have voted for Donald Trump than Hillary Clinton.
If so, voters in “losing” real estate markets, where housing prices still lag their pre-2008 peaks, would have voted Republican, while voters in “winning” areas, where there has been considerable price appreciation, went Democratic.
The story, however, is much more mixed based on a deeper dive into post-2008 housing price data.
Homeownership traditionally has represented the greatest portion of wealth for the majority of American households.
During this economic recovery, the housing sector still has not returned to its pre-2008 peak despite readily available financing.1
To get perspective on how participation in this economic recovery affected voting patterns in 2016, we look at the top 40 and the bottom 40 metropolitan areas in the country in terms of the percentage change in the Freddie Mac House Price (FMHP) Index from the pre-2008 peak. (Chart 1)
According to the FMHP Indices for 367 metropolitan areas, house prices are still on average 1.2 percent below their pre-2008 peaks. The median percentage change is 1.8 percent below the peak.
Bismarck, N.D., ranks highest. Its FMHP Index is 52.5 percent above its pre-2008 peak.
In second place is Austin-Round Rock, Texas, with its FMHP Index 51.5 percent above its pre-2008 peak. Thirteen of the 40 top “winning” spots are in Texas. In fact, the only “losing” area in Texas is El Paso.
Rounding out the top five are major cities in Colorado: Denver, Fort Collins and Boulder are all up 50 percent from their pre-2008 peaks.
At the bottom of the ranking is East Stroudsburg, Pa., which remains 36.1 percent below its pre-2008 peak. Many legacy housing bubble markets in Florida (11 metro areas), California (10 metro areas), Arizona (four metro areas) and Nevada (Las Vegas-Henderson-Paradise) also are on the list of bottom 40 “losing” counties.
Metro areas in states with otherwise affluent communities also show up in the bottom 40. Every metro area in Connecticut and Maryland that is tracked by Freddie Mac remains down, with most of them 10 percent below their pre-2008 peaks.
The popular narrative suggests that Clinton prevailed in the majority of the top 40 “winning” metro areas throughout the country. Surprisingly, the majority of these communities voted for Trump.
Of the top 40 “winning” real estate markets, each with improving wealth and increases in their FMHP Index between 17 and 52 percent from their pre-2008 peak, 25 voted for Trump and 15 voted for Clinton.
In fact, even in the top 20 markets where the FMHP Index was 27 percent or more above the pre-2008 peak, the majority (12/20) of these metro areas voted for Trump. (Chart 2)
Among the bottom 40 “losing” metro areas, 26 did indeed vote for Trump, while 14 voted for Clinton. However, among the bottom 20 real estate markets, just over half (11/20) went for Trump, while nine counties went for Clinton. (Chart 3) According to conventional wisdom, support for Trump in the bottom 20 markets should have been more robust and overwhelming.
The upshot of all this is that the presidential election, like the campaign, did not adhere to conventional wisdom. People did not vote as predicted nor as polls indicated they would. At least where home values are concerned, they did not vote with their wallets.
1 Although housing prices are 15 percent above the prior peak, the housing sector in terms of units constructed is still only two-thirds of its previous peak. See Bureau of Economic Analysis, Table 5.3.3. Real Private Fixed Investment by Type, Quantity Indexes (line 20), and Table 5.3.4. Price Indexes for Private Investment by Type (line 20).
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