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Industry Insight: Housing Affordability Across Congressional Districts

American Flag Money BHA recent report from Zillow shows the variance in affordability across all congressional districts in the United States. Zillow Senior Economist, Aaron Terrazas, spoke with DS News about the disparity of housing affordability and rental costs and what that may look like in the following years.

What affordability trends did you see among the congressional districts?

The way we look at affordability at Zillow is looking at the share of the typical household's income that would go toward either a monthly mortgage payment or monthly rent on the typical unit in their area. For instance, we looked at the median home value, what monthly mortgage payment would you need to buy that home, and then we pair that monthly mortgage payment to census data on the median income. We do the same for rent, so what the monthly rent would be. When you look at this ratio (it is a percentage), the big cities tend to be more expensive including the western United States and the South and Midwest. Those are the trends that we saw in the data. The most expensive and least affordable congressional districts are in New York, Los Angeles, and San Francisco.

How do these trends align with the respective political parties?
In general the big cities tend to lean towards being Democratic, that being said though, we do see expensive districts across party lines. For instance, up and down the California coast there are Democrats and Republicans representing those districts and California is of course the most expensive state in the country.
What factors are causing the disparity in affordability?
The factors driving increasing home values and rents are the combination of strong job growth and the expense of building new units. Supply is very tight in some of these markets and regulation contributes to that. Additionally, when you look back over the past decade, all of the household formation has been on the rental side and that has been a large factor in driving rents.
In looking toward the future, what do you anticipate for the growth or decline in this disparity?
We are hopeful in 2017 that income growth will pick up. We are already starting to see that this year and the labor market is tighter than it has been in a decade. That should ease affordability as income starts to catch up with the real extraordinary pace of home value and rent growth that we have seen over the past two years.

About Author: Kendall Baer

Kendall Baer is a Baylor University graduate with a degree in news editorial journalism and a minor in marketing. She is fluent in both English and Italian, and studied abroad in Florence, Italy. Apart from her work as a journalist, she has also managed professional associations such as Association of Corporate Counsel, Commercial Real Estate Women, American Immigration Lawyers Association, and Project Management Institute for Association Management Consultants in Houston, Texas. Born and raised in Texas, Baer now works as the online editor for DS News.

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