Homophobic Neighbors can be Bad for Home Values

Prejudice is a difficult concept to measure. One possible way is to ask people the question, “Who would you not like to have as a neighbor?”  When the World Values Survey (WVS) asks this question the order of the most popular responses goes like this: drug addicts, heavy drinkers, and homosexuals.

In the United States, for example, 26% of respondents to the WVS said that they would not like to have homosexuals as neighbors – more than six times the number who said they would not like to have a person of a different race as a neighbor.

Simply stating that you wouldn’t want to have homosexuals as neighbors and actually acting on that belief are two different things. It isn’t like American families up and sell their houses just because a homosexual couple moves in next door. That would be crazy, right?

If people were making that choice then we would have a new measure of prejudice against homosexuals – the fall in housing prices that would result when a homosexual couple moved into a neighborhood and caused an increase in the supply of homes on the market.

We have already seen here, though, that having homosexual neighbors actually increases home values. So while 26% of Americans may state they would object to having homosexual neighbors, on average this prejudice in not showing up on the housing market.

But that is just the average and an interesting new economics paper that uses data from over 20,000 home sales in Columbus, Ohio finds, not surprisingly, that the political leaning of the neighborhood matters when it comes to the relationship between the percentage of homosexual households and home values.

They find an increase in same-sex households in a neighborhood that is more socially liberal leads to higher home values while an increase in same-sex households in a neighborhood that is more socially conservative leads to lower home values.

Remarkably, they find that just one additional same-sex couple (per 1000 households) in an extremely socially conservative neighborhood reduces house prices in that neighborhood by a full 1%.

In buying and selling houses this type of discrimination probably only affects same-sex couples in that their mere presence in a conservative area reduces the value of their own home. I suspect that in rental markets, however, prejudice in housing has a more direct effect on same-sex couples. If a landlord perceives that renting to same-sex couples will reduce his/her ability to rent out other units in the same building then it might be difficult for homosexual couples to find rental housing in conservative areas.

This story reminds me of a time that I tried to rent an apartment in a French area in Canada. When I arrived to see the unit the landlord took one look at me and said angrily “No English!” In France, where I live now, according to the WVS, 28% of people say they would not like to have a neighbor who speaks a different language and, as any English speaker who has lived here will verify, that means one thing for Anglos in France – higher rents.

For those of you who are interested in the amazing data available on values around the world made available by the WVS check out the online data analyzer available on their website. It is easy to use and full of interesting international comparisons on a wide variety of beliefs and morals.

Reference:

Christaforea, David and Susane Leguizamon (2012). “The influence of gay and lesbian coupled households on house prices in conservative and liberal neighborhoods.” Journal of Urban Economics, Vol. 71(1): pp 258–267.