States With Higher Median House Prices Back Obama

Stephen Chung

Managing Director

Zeppelin Real Estate Analysis Limited

November 2012

Nice weather, nice house, nice price too...

Out of curiosity, your humble author has done a simple correlation between the median house prices and the probabilities of an Obama victory (or Romneys if you like, the math would be the same) in the various states in the US to see if there is any correlation.

There is and the value is around 0.52 being not overly significant but neither ignorable. Naturally, correlation by itself does not automatically imply causality between the two aspects.

The data comes from www.zillow.com and www.predictwise.com noting a) the median asking prices have been used as sold prices of the same timeframe were not found; b) the probability percentages reflect the chance of an Obama win in each of the states, not the percentages of the people who support Obama.

Here are 2 charts showing (a) and (b) above respectively:

A couple of observations:

1) The national median asking price is around US$190K = starting from the lowest of $100K (Arkansas) to the highest $450K (Hawaii) with most states being in the $200K bandwidth, except for states like California, New York, and Massachusetts which hover in the $300K range. 

2) The probabilities of an Obama victory = range from certain sure losses via a few 50 / 50s to certain sure wins.

We have plotted the 2 values above and here is the resultant chart:

A few abstracts:

A) States which show no or little chance of an Obama win tend to have lower than national median house prices.

B) But this does not mean states with low median house prices all back Romney i.e. Obama has his share of low median house price states.

C) States which indicate a Romney victory collectively show a narrower median house price range (from the low to the middle priced) whereas those likely to have an Obama win cover the whole range (from the low to the high priced).

Not being based in the USA and not familiar with its politics, your humble author shall leave the interpretation to readers. Nonetheless in general, higher house prices tend to have higher GDP per capita which in turn jives with the overall educational level.

In any event, real estate investors from Hong Kong mostly end up, perhaps coincidentally, buying in Obama-win states.

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