A new working paper produced by Joseph Gyourko and Fernando Ferreira—two researchers at The Wharton School of Business at the University of Pennsylvania—shows that supply of housing from city to city is not dependent on the political party in power, at least at the local level.
Both Gyourko and Ferreira examined the relationship between housing supply, affordability and political partisanship in U.S. cities through various formulas. The paper cited data from a database of mayoral elections which were combined with local housing permits dating back to 1980, as well as state, county and city election boards— even local newspapers.
Ultimately, both Gyourko and Ferreira concluded “that partisanship has no effect on the supply of single and multifamily housing despite recent increases in extreme partisanship, corroborating that U.S. cities follow the median voter. This indicates that solutions to housing affordability will not be dependent upon the political party in power at the local level.”
In short, the political leaning of a town or city, whether Republican or Democrat, does not directly affect housing supply—and by extension, housing affordability, which remains at crisis levels in many regions.
The researchers used an analytical technique to filter data and account for numerous variables, including geography, labor market and the voting margins of local elections. For example, checking to see if “partisanship could be relevant when the number of potentially competitive nearby jurisdictions within the local labor market area is low.”
Ultimately, even when considering potential heterogeneity of cities based on factors such as population size, growth rate or time period, the absence of a partisan effect on housing supply remains consistent, the researchers found.
“There is some heterogeneity about this average result that appears driven by the underlying nature of multijurisdiction labor market areas that allows for people to vote with their feet and sort based on preferences for public outcomes,” the researchers wrote. “In previous work, we found this helped discipline potential partisan preferences regarding overall spending and its allocation across functions. The same holds here with respect to housing permitting intensity in many of our specifications.”
An interesting data takeaway from the study regarding permitting is that on average, Democratic-led cities provide slightly fewer permits than Republican cities, mostly as a result of lower single-family unit permitting.
“In aggregate, this translates into about a 16% smaller housing supply increase than the average city,” the researchers wrote.
There is modest evidence that shows that if the number of competitive jurisdictions is small, Democratic mayors permit homes for more total homebuilding—showing slight partisan preference—however, data indicates that there is still essentially zero partisan impact overall on multifamily permitting.
The researchers also cited previous studies that examined housing supply at the international level, including an analysis of the welfare and economic consequences of a specific zoning reform in Brazil.
That separate study discovered that “a fair amount of the economic value of zoning reforms comes through the presence of newer housing stock, as opposed to lower prices.” This international report also showed that aggressive zoning reforms produced larger welfare gains, but simultaneously had a negative impact on the housing wealth of existing homeowners and landlords—leading to potential political turmoil.
Concluding, Ferreira and Gyourko wrote that “(i)t certainly appears that localities can restrict housing development by not issuing permits if they so desire, and this paper concludes that pattern is not due to political partisanship as reflected in being a Democrat or Republican.”
To read the full study, click here.
