Housing Bubbles and Support for Incumbents

The state of the economy - one’s own or that of the nation - has long been considered among the most important predictors of support for incumbent politicians. While a simple idea at heart, the specifics of retrospective voting remain debated. In this paper, we focus on what we believe to be an understudied economic influence: local housing markets. We propose that housing markets shape voting by providing locally derivable information about incumbent politicians’ capacity to manage the economy, and test this proposition by examining the relationship between changes in the local housing market and support for the incumbent government in Denmark. Linking uniquely detailed and comprehensive data on housing sales at the local level to both precinct-level election returns and a two-wave panel survey, we find the hypothesized positive relationship between local housing prices and support for governing parties.