2024
Language:
English

The Political Economy of Housing Affordability, Ownership, and the Social Safety Net

In the United States, home prices have grown faster than incomes-making housing less and less affordable- but ownership rates remain consistent. While barriers to homeownership grow larger, existing homeowners are rewarded with a rapidly appreciating asset. Home equity behaves similarly to a social safety net, providing a financial cushion and acting as a form of “private insurance”. While higher incomes decrease support for the social safety net, few studies have looked at how home equity influences political opinions. The impact of housing affordability on public support for social safety net spending is examined in this paper. Combining American National Election Studies and American Community Survey data from 2012 to 2020, homeownership is found to decrease support for safety net policies, while higher home prices (in absolute terms and relative to local median income) increases support for the same policies. The positive relationship between less affordable housing and support for a social safety net contradicts similar studies in Western Europe, suggesting that American homeowners do not view increased home values as a driver of individual financial security. The positive relationship between housing prices and support for safety net spending exists for renters and homeowners alike, suggesting that the local housing market dynamics impact support for social safety nets independent of ownership.