Housing Bubble?

HOUSING BUBBLE?….We all like weird little economic mysteries, don’t we? Especially when they include the opportunity for some crude Republican bashing?

The graph on the right, courtesy of the Progressive Review, shows that housing appreciation has been far higher in states that voted for Gore compared to states that voted for Bush. We already know that blue states tend to have stronger economies and generate more tax revenue than red states, and now it turns out that your housing investment does better in blue states too.

Why is this? Perhaps because appreciation is higher in urban areas, and urban areas tend to vote Democratic? Because liberal states tend to generate higher income growth, which in turn means that more high income families are bidding for houses? Because liberal states have artifically restricted the growth of housing stock, thus driving up prices?

Or maybe it’s just because skyrocketing home prices are un-American?

I don’t know either, but like the Progressive Review, I welcome your theories. In the true spirit of petty partisan demagoguery and amateur asset pricing analysis, I know we can solve this mystery.