It's actually called "Toasted Cherry."

Is Your House Red or Blue?

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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It is often remarked that blue cities, full of people who purport to care about affordable housing and reducing inequality, have some of the highest rates of inequality as well as the highest housing prices in the nation. Along comes Trulia with a graph that demonstrates this phenomenon dramatically. The online real estate site compared home prices in local housing markets to the percentage by which President Barack Obama won or lost the popular vote in the 2012 election:

Inequality also seems to be correlated with blue-stateness. It's harder to get data on inequality by city, but if you look at state-level data, you see that the top three for inequality are New York, Washington, D.C., and Connecticut ... and of the states that rank lower than the U.S. average for all three major measures of inequality, red or purple states predominate, while less than a third are bright blue.

Why would this be? I suspect that immigration plays a role in inequality; if you open your doors to a large number of low-skilled workers who don't speak the local language, they will drive up your rates of poverty and inequality, even if there's no change in the relative income of the people who were there before. On a national level, this factor probably doesn't drive a huge amount of the change in inequality over the last few decades. But on a local level, I suspect it does.

A sizable number of blue cities also have vast fortunes made possible by the globalization of everything: finance, entertainment, technology. The concentration of those industries in blue cities drives up income inequality; it also drives up the price of the houses those kinds of people live in.

But that can't explain all the housing inequality, because after all, you could always build more housing, skyscrapers with penthouses for the wealthy, smaller flats for those living down in the canyons. Edward Glaeser has spent much of his career arguing, quite convincingly, that blue-state housing prices are so high because there are so many regulations preventing new building.

Which leaves a question, however: why so much regulation? Do blue-state urban dwellers have so many regulations because something about blue-state conditions demand them? Or do they have so many regulations because blue-staters like regulations that make it hard to build new housing?

Another way to phrase this question might be: Does living in a blue urban area make you a regulation-loving liberal, or does being a regulation-loving liberal make you live in a blue area?

Having spent most of my life in two of the bluest areas of the country -- New York City and Washington -- I tend to think the answer is "a little bit of both, with an emphasis on the second." A huge city like New York, where the city was largely constructed before the advent of the automobile and the Metropolitan Statistical Area has run out of farmland to expand into, really does require more government coordination than living in a nice, flat, booming red-state metropolis such as Kansas City, Missouri. There's simply no realistic way for many more people to move around the area by single-passenger auto transport, because the highways are at capacity around the employment hubs, and you can't widen the roads without knocking down a lot of the buildings that people are trying to get to. This would cost a fortune in land acquisition, and defeat much of the purpose, so we need higher-capacity lines -- rail or dedicated bus lanes -- that can move more people faster. That's not a political statement about eeeevillll automobiles; it's a factual statement about how many cars the roads can carry. Blue states also tend to be in coastal areas, meaning they have less room to grow outward from their hubs in at least one direction. This may contribute to the cost of housing, and it also increases the burden on the arteries they do have.

Density also multiplies the frictions over things such as noise, pets, public amenities and so forth that people have to put up with. Which increases the pressure for a resolution via the law.

But I don't think that anyone who has lived in a blue metro area can say, with a straight face, that the political predilections of citizens don't have something to do with it. Many people move to blue areas because they were ultra-liberal back where they came from, and they couldn't wait to get away from their conservative communities. Harry Enten and Nate Silver make a pretty convincing case that political convictions precede migration both into and out of blue states. People arrive in blue states having less reverence for property rights and more reverence for government regulation, and they act, and vote, upon those beliefs.

Consider, too, that the liberal base is composed of a large number of small interest groups with a long and successful history of lobbying government for laws. Those groups have paid a lot of attention to enabling this sort of action, making sure that their local political institutions have lots of avenues by which small groups can affect the legislative process. Everything has extensive community review, and it's easy for local groups to file lawsuits that block some undesirable project.

So when a local developer proposes to, say, build a huge housing project down the street, every neighborhood is well supplied with folks who have organizing experience and know how to lobby against something they don't like. Those organizers have a lot of tools to fight with.

Unclogging this blockage is made more difficult by the fact that liberalism does have such a diverse coalition; it's easy to motivate neighbors in opposition to a local project, but it's hard to get the whole group to stay together to force through things such as zoning changes that would make it easier to build more housing. The activists who want to change the zoning code often like veto points such as community review; they just don't want them applied to affordable-housing initiatives. However, as soon as you try to exempt affordable-housing initiatives, you lose the homeowners who like things in their particular neighborhood just as they are and very definitely do not want to give city bureaucrats unfettered power to plop a housing project down the street from them.

It's also made more complicated by the fact that the costs of building more housing are local, while the benefits accrue to the whole MSA. Building lots of new tall buildings in my neighborhood would reduce prices in the city as a whole. But it would only block the light for locals. And it might even raise our local housing prices if the new buildings have lots of attractive retail -- good for homeowners, but a quandary for local groups concerned with affordable housing in the immediate area (including politicians).

To sum up: Our housing is expensive because it's hard to run a really big city. But one reason it's harder is that the sort of people who flock to big cities tend to make it so.

  1. Homeowners often theoretically favor affordable housing, but they do not want more of it near them. In mixed neighborhoods such as mine, they complain that we've already got more than our fair share of such facilities (true); in rich neighborhoods such as Georgetown or Sutton Place, they say that it would change the character of the neighborhood (true). These people will not help you make rules that would allow the city government to plop a 300-unit housing project next to their gracious row house, and as the cities gentrify, they are coming to be a higher percentage of homeowners. To complicate things further, in cities where rent control covers a lot of the housing stock, the people in rent-controlled apartments often display homeowner-like behavior regarding changes to their neighborhoods.

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To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Brooke Sample at bsample1@bloomberg.net