It may be intuitive that homeowners in Republican counties pay less in property taxes than homeowners in Democratic counties, but taxes aren’t the only factor determining which party is better for homeowners this election.
Wealthy, Democratic-leaning counties had a greater wealth disparity for homeowners than Republican counties in 2019, according to a new study by ATTOM, an Irvine, Calif.-based property data company, which designated counties as Republican or Democrat based on their Congressional representation.
“In some of the Red districts, it is more of a homogenous market, while there is more diversity of economic status in some of the Blue districts,” said Rick Sharga, executive vice president at ATTOM subsidiary RealtyTrac.
Democratic-leaning counties had a higher average home sale price ($428,958) than Republican counties ($245,085) in 2019, and owners had paid off more of their mortgages on average — 31% had paid off at least half of their mortgage compared to only 24.3% of homeowners in Republican counties.
But Democrat-leaning counties had about 20% more foreclosures in 2019, and 7.2% of homeowners in Democrat districts were significantly (125%) underwater on their loans in 2019 compared to only 4.9% of homeowners in Republican counties, the study found.
“In some of the bigger cities, there are very high-priced areas of the market, and there are areas that are really disadvantaged economically. That’s the reality of a lot of the Blue markets that are bigger, urban, large cities compared to suburban markets,” said Sharga.
A shift due to COVID-19
In 2020 and beyond, homes in Republican districts are expected to get more expensive because of suburbanization. Homebuyers are looking for larger, more affordable housing in suburban areas during the coronavirus pandemic. Home prices in popular suburbs rose 2.8% more than urban home prices in 2020, after having only a 1.8% advantage in 2019, according to First American, a Santa Ana-based provider of title insurance, settlement services and risk solutions for real estate transactions.
“There is a question of stability of those price gains in the long run, but that’s something we’d have to dig into,” said Sharga. “We are seeing higher demand for those properties in the Red markets right now, plus historically low levels of inventory, so people are bidding against each other and sending those property prices up.”
Meanwhile, Democrat counties have more valuable homes in part because of their luxury condos and townhomes, but property values are decreasing in high-density urban areas. Experts do not believe that U.S. cities are due for a sharp price correction, but low demand for city homes has stunted price growth in areas like New York City and San Francisco.
“The pandemic is probably accelerating that trend of people moving out of Blue states into Red states because of the work-from-home phenomenon… Whether that would have been the case absent COVID, I don’t know, but I do believe that remote work will probably have an effect on larger, higher population density cities,” Sharga said.
Sarah Paynter is a reporter at Yahoo Finance.
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