COVID-19, Political Orientation and Residential Real Estate Returns

Abstract

This paper investigates whether political orientation has an influence on residential real estate returns in the context of the Covid-19 pandemic. Using county level housing data from January to June 2020, we document that the Democratic counties and the counties with higher prosocial scores experience a significant decline in residential real estate returns on the early onset of Covid-19 pandemic. Our estimate suggests that an 10% increase in Covid deaths is associated with an 8.48% annual decline in real estate returns in Democratic counties. Residential real estate returns are also negatively associated with Covid-19 statistics in counties with liberal news viewership. Difference-in-difference estimates show that the influence of political orientation on real estate returns is unique to the Covid-19 crisis period. Overall, our findings underscore political orientation as an important dimension that affects asset returns.

Keywords: COVID-19, Real Estate, Asset Pricing

JEL Classification: G4, G12, I15, P16, P25, R10