The Impacts of Local Housing Markets on U.S. Presidential Elections: Via the Collateral Channel

ABSTRACT Housing is an important asset for many households in the United States. Nevertheless, our understanding of the relationships between housing markets and election outcomes remains somewhat limited. Examining the influence of local housing markets on U.S. presidential elections in the past three decades, this paper presents evidence that a faster rise in county‐level house prices increases the share of the county's vote that goes to the incumbent party. That is, greater support for the incumbent party in counties where housing prices outpaced the national average. This effect, however, exhibits significant variation among counties and becomes more pronounced in regions where a larger proportion of homeowners with mortgage debts. These results support the “collateral effect” channel as the primary mechanism through which local housing markets affect U.S. national elections.