Do Politics Impact California’s Real Estate Market?

The major political parties make a big deal about how important it is to vote them in. If you take them at their word, their governance will affect everything, from personal rights to the economy. However, it is important to check whether it makes a material difference who is governing.

One important area in the well-being of the state of California is the real estate market. This is a part of the economy that cannot be looked at in dollar figures alone. After all, the state of the realty market impacts each and every person’s life. Housing is a basic necessity.

If you’re renting your home, you’ll know just how unstable the rental market has been. Even if associated costs like California renters insurance is low, the price of rent is extremely high. The same is true in regards to the price of the property for potential buyers.

Does this have anything to do with the fact that Democrats are in power? Or is the political impact just a facade?

How do we assess the real estate market?

In order to understand whether politics have an impact on the real estate market in California, we need to determine what we consider positive and negative in this regard. We cannot just focus on one aspect. If you were to look at nothing but the price of housing as a sign of a flourishing market, you’d get the impression that everything is going great.

But the high cost of housing – both in terms of rentals and sales – is a factor in the affordable housing crisis. While we don’t want sellers and landlords to struggle to make money, high prices make it hard for low-income earners to find somewhere to live.

Furthermore, prices can be a kind of mirage. Too much growth can look good on paper but may signal a coming crash. In fact, prices finally seem to be coming down, and it is impossible as yet to say whether this is good or bad news.

Let’s look at the main two factors and see how local politics are impacting the market.


California is not the only state in which prices have risen at a dramatic pace over the past couple of years. That trend has been prevalent throughout the country. Whether you live in a red, blue, or purple state, you’ll have seen prices skyrocketing.

Looking at where prices are highest can also be misleading. Many blue states have the highest housing prices and highest rent. San Francisco is one of the most expensive cities for buying or renting a home in the world. But this would be the case regardless of who was in charge. It is simply an incredibly desirable place to live – it has beaches, nightlife, and is home to Silicon Valley.

The reality is that people in states with high housing prices are more likely to vote Democrat. In other words, it is not the governance that leads to the housing prices, but it is more likely the other way around.

Democrats cannot be praised or blamed for the high cost of housing in California. But what about the availability (or lack thereof) of affordable housing?

Affordable Housing

There is a lack of affordable housing in California. While the Democratic Party can rightly claim that this is a problem that predates them, the reality is that California has leaned Democrat for a long time.

That said, Governor Gavin Newsom is making some changes that will improve access to affordable housing. These are changes a Republican governor would be unlikely to make. Newsom has chosen publicly-owned sites for building affordable housing.

A law that restricts the building of public housing that was put in place in 1950 is set to be repealed in 2024 (at least if Californians approve it at the polls). This law has a racist history and has made it tough for minorities and low-income earners to get affordable housing throughout the years. Democratic posturing has had limited impact.

Does politics impact the real estate market in California? The answer is certainly yes. However, the impact is incredibly difficult to quantify without going back in time. We cannot know how things would play out under different governance. What can be said is that affordable housing has remained limited in spite of Democratic governance.

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