The Real Reason Why GOP-Led States Have Affordable Housing and Blue States Don’t

gopixa /
gopixa /

The current housing market in the United States is facing a persistent affordability crisis. Housing costs have become increasingly unaffordable for both renters and buyers. More than 40% of renters are burdened by costs, which means they spend more than 30% of their income on housing.

Housing prices are also rising faster than wage growth in 80% of U.S. markets. The situation worsened due to the work-from-home trend and supply chain shortages caused by the COVID-19 pandemic. However, there are stark contrasts in housing affordability between red states like Texas and Blue states like California and New York.

In states such as California, New York, and Illinois, the Democratic Party holds complete control over the government, including writing laws and running the state. However, they frequently fail to live up to their values.

Many blue states are struggling in various ways when compared to Republican-led states. Affordable housing is particularly scarce in these blue states, and they also experience some of the most significant disparities in education funding. Perhaps most surprising of all is that economic inequality is increasing at a faster rate in blue states.

A prolonged shortage of homes in the U.S., mainly stemming from inadequate construction following the 2008 financial crisis, has sustained elevated prices despite waning interest from prospective homebuyers grappling with rising mortgage rates.

Although the number of homes available for sale has shown recent upticks, it remains notably deficient by historical standards. Matthew Walsh, a housing economist at Moody’s Analytics, notes that the scarcity of homes fosters fierce buyer competition, propelling prices upwards. As a result of the current sales pace, the housing market has a supply of only 3.5 months. This is good for existing homeowners but challenging for potential buyers.

While Texas has been able to construct or begin building millions of new homes in recent years, Blue states are struggling to replenish their housing inventory. As a result of this disparity, different parts of the country have had varying degrees of success in addressing the housing crisis.

According to Lawrence Yun, chief economist at the National Association of Realtors (NAR), Texas has emerged as a standout in new home construction, having surpassed California’s output for several years. Recent data underscore this trend, with Texas issuing significantly more single-family home permits than California, further accentuating the disparity in overall housing development between the two states.

While precise figures for recent years are unavailable, Yun suggests a general trend favoring more robust home construction in the South. According to Walsh, Texas and Florida have the highest number of construction starts in 2023. Idaho, North Carolina, and Florida are among the leaders in construction starts per person.

The disparity in home construction activity between Texas and other states is largely attributed to regulatory disparities. Yun points to Texas’ more lenient building regulations compared to the demanding constraints in California, which hinder supply expansion. Walsh also underscores lower construction costs and more favorable zoning laws in Texas, contributing to its burgeoning construction activity.

While Texas has been able to construct or begin building millions of new homes in recent years, blue states are struggling to replenish their housing inventory. The vast difference in success rates of tackling the housing crisis across regions underscores the urgent need for a more unified and effective approach to this pressing issue.

Given Texas’ robust demographic growth, builders gravitate towards markets with stronger demand dynamics, aligning investment decisions with local population trends. While Texas thrives on its pro-development environment, Yun emphasizes the adverse repercussions of inadequate housing supply in states like California, which are exacerbating economic divides between property owners and renters.

Yun advocates for a Texas-style approach to housing development to alleviate affordability pressures, emphasizing the imperative of increasing supply to meet demand. Walsh echoes this sentiment, advocating for zoning reforms and federal immigration policies to address the critical shortage of builders and mitigate construction costs.

Republican-led states are doing a better job of meeting housing needs than their Democratic counterparts. Blue stated need to adopt a s a multifaceted approach encompassing regulatory reforms, investment incentives, and proactive development initiatives tailored to each state’s unique circumstances.