Local Housing Prices and Economic Anxiety

Do housing prices influence how individuals perceive their economic standing? Recent research linking housing prices to electoral outcomes suggests that they do. The theoretical expectation is that individuals update their economic perceptions based on housing costs and vote accordingly. However, it remains empirically untested whether housing prices trigger an economic reaction, and if so, whether this pertains to individual economic standing or sociotropic ones such as the national economy or the level of inequality. Testing this expectation is essential since other theoretical paths could explain the assumed link between housing prices and political reactions. This paper interrogates this key assumption by testing whether renters and owners react differently to housing market information. In two experiments conducted in the United States and Canada, treatments inform participants about local housing costs. Informing respondents about the cost of home ownership in their locality triggers economic anxiety among renters, but not all homeowners since only economically at-risk owners exhibit attitudes akin to renters. The results are important for our understanding of the political consequences of surging housing prices and its potential link with anti-establishment vote. The study shed light on the economic anxiety this may generate and identify the groups most affected.