Real Estate Moms

Michael Barone, the dean of electoral politics, thinks there may be a new demographic that politicians will have to look at as the did Soccer Moms and NASCAR Dads - Real Estate Moms:

In the 1990s, we in the political commentariat talked a lot about Soccer Moms, the group targeted so successfully by Bill Clinton in 1996--women who wanted their children protected and nurtured, who favored Mr. Clinton's education and V-chip and family-leave programs. And in the past few years we've talked a lot about Security Moms, who seem to have voted for George W. Bush in 2004--women who want their families protected against terrorists. I now have another group we should talk about, and probably should have been talking about all along--Real Estate Moms, women who have seen their families' net worth climb thanks to rising home prices.

Most Americans accumulate significant, six-figure wealth in the course of their lifetimes. During the late 1990s stock market boom, most household wealth was in financial instruments, but today and before the late 1990s the majority of household wealth was in residential real estate. And in politics the key economic issue for voters may be changing, from concern about short-term income to concern about the long-term, lifelong project of accumulating wealth.

Not everybody is a Real Estate Mom. Housing values are far higher in the big metropolitan areas on the East and West coasts than they are in the Midwestern heartland and the Deep South. Higher generally in the blue (Democratic) states than the red (Republican) states. You could argue that the blue states are blue because of Real Estate Moms. In the early 1990s, real estate values plummeted and the coast suburbs that had voted for Republicans in the 1980s switched to Bill Clinton and Ross Perot. George H. W. Bush's percentage declined most in 1988-92 in areas where real estate values plummeted most, New Hampshire and southern California. Bill Clinton held these votes for himself in 1996 and Al Gore in 2000 as real estate values rose again. As growth sagged after 2000, real estate values kept rising, and consumers kept spending as they refinanced their mortgages and tapped their increased equity.

What will happen politically if, as some expect, the housing market is a bubble and bursts? One possibility is that George W. Bush's Republicans will suffer. But they've never really regained the Real Estate Mom votes their party won in the 1980s. Another possibility: The tax issue will reemerge. Democrats in 2008, like John Kerry in 2004, will probably call for repeal of tax cuts on "the rich." Real Estate Moms didn't mind when they were busy refinancing. But if there's no equity to tap, they might want that tax-cut money as they did in the 1980s.

I guess Mrs. HolyCoast would be one of those Blue-State Real Estate Moms, though she never departed from the GOP (at least not that I know of). We've seen a dramatic increase in our home's equity after living here 15 years, and more and more I find myself looking at this house as an integral part of my retirement plan.

Would we get hurt if housing prices fell? Of course, but probably not as much as some who are closer to retirement and may be considering selling and moving to an area where the cost of living is much cheaper. Our location helps us a lot when it comes to pricing. We don't have an ocean view, live on a golf course, or live in an exclusive community, but we do live in Southern Orange County, CA, one of the most desirable locations on the planet. As long as we continue to have nice weather, good schools, lots of amenities nearby, housing prices may stumble a bit, but you won't see the kind of collapse that has been seen in other parts of the country.

The other thing going for us is the simple concept of supply and demand. There won't be very many new homes built within 20 miles of us due to the lack of open land. There's no shortage of people trying to move to this area (though I don't know where these people get all of this money) and as long as housing can't keep up with demand, our home pricing will keep climbing.

Of course, there's always one thing that could burst the balloon like nothing else. If there's a major earthquake in Southern California that destroys our home, insurance is not going to pay us for all that equity. That's the REAL real estate risk around here.