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Housing affordability is Blue America's greatest failing

Looks nice. They should make more.
Looks nice. They should make more.
Spencer Platt

One of the fundamental facts of American demographic life is what Robert Gebelhoff and David Leonhardt call the Blue State Diaspora — the large net flow of Americans out of blue states and into red ones. Gebelhoff and Leonhardt are primarily interested in the consequences of this diaspora for partisan politics, but I think what's most important is the causes. Liberals, in particular, might want to do some reflecting about the fact that Americans are voting with their feet against blue states.

After all, the blue states have a lot going for them. Wages, education levels, and health outcomes are generally higher. So why are people running the other way?

All about the housing

Conservatives, of course, tend to think they know the answer — Americans are fleeing the high taxes and malgovernment of blue America. The city of Detroit often comes up in this context, and it is certainly true that malgovernment (among other things) has made that city and several others into an increasingly undesirable place to live.

On the other hand, if Detroit were the typical blue American city, then houses in the Mission and Park Slope would be cheaper than houses in the suburbs of Atlanta and Dallas. The truth is that, while there are pockets of economic pain all around the country, in general, Blue America is a nice place to live with homes in high demand.

So why does everyone leave? Well, precisely because houses in Blue America generally aren't cheap, like those in Detroit. They're more often expensive, like those in San Francisco. Coastal states are generally more expensive.


Alan Cole, Lyman Stone, and Richard Borean, Tax Foundation

And as the Squarely Rooted blog has shown, these disparities are overwhelmingly driven by housing costs.

Whatever else Blue America has going for it, it's done a terrible job of generating enough housing supply to accommodate all the people who might like to live there. So in addition to the traditional southward migration of retirees, you now see a substantial net population flow away from richer areas in the Northeast and the California coast to the relatively low-wage economies of Texas, North Carolina, and Georgia. For many working- and middle-class Americans, the lower cost of living makes a decisive difference.

Zoned out

This comes about primarily because coastal areas have adopted excessively strict zoning rules. There is not enough semi-dense mid-rise construction in the affluent suburbs of San Francisco, Seattle, Boston, New York, Philadelphia, Washington DC, etc. Secondarily, there are too many restrictions on the creation of new, big apartment towers in the very most expensive parts of coastal cities.

Incidentally, the widespread nature of the high coastal housing cost problem should give pause to the people who insist that it has nothing to do with zoning and is all about absentee foreign billionaires.

Most foreign buyers are Canadians looking for vacation homes someplace sunny. And while the Russian billionaire seeking a Manhattan pied-à-terre is a real phenomenon, it's a stretch to imagine that foreign playboys are the ones bidding up the price of houses in Bergen County or Bethesda. The fact that overregulation of the land use sector is driving people out of blue states (and costing the national economy billions in the process) doesn't mean that red states' aversion to regulation is right across the board. But it is a real — and really big — failure of the political economy of American liberalism, and it's something liberals ought to take more seriously.