HereÕ how gay marriage will improve housing

The debate may rage but there’s an inarguable bottom line

Today’s announcement by the Supreme Court making gay marriage a right throughout the land will be heralded, derided and debated for months and years, but there’s one thing that's inarguable – gay couples have a positive impact on housing.

A 2012 study summarized by the Harvard Business Review confirms that an old stereotype about gay couples gentrifying neighborhoods and improving homes has a strong basis in reality:

The addition of one same-sex couple for every 1,000 households is associated with a 1% increase in home prices in U.S. neighborhoods that are socially liberal, but a 1% drop in neighborhoods that are extremely conservative, say David Christafore of Konkuk University in South Korea and Susane Leguizamon of Tulane University. Their study of more than 20,000 real estate transactions in Ohio in 2000 supports previous findings that migration of same-sex couples to an area increases home values, in part because these residents tend to develop or enhance cultural amenities. But the new research suggests that in socially conservative areas, housing prices reflect prejudice against gays.

Furthermore, Trulia just completed a survey last month that showed that neighborhoods with more gay people tend to be pricier:

For each ZIP code in the U.S., we calculated the share of households that are same-sex male couples and same-sex female couples, based on the 2010 Census. Then, we combined the Census data on where gay people live with median price per foot of listed homes in each ZIP code on Trulia over the past year.

(The fine print: The Census doesn’t ask sexual orientation, of course, so the only way to measure gay neighborhoods is based on where couples live. The Census data requires some corrections and adjustments, described here. Finally, ZIP codes don’t line up perfectly with neighborhoods, but we did our best to use the closest neighborhood names that correspond to the ZIP codes in our analysis.)

Will the ruling result in more gays forming households? The housing industry can only hope so.

Here’s a breakdown with the best estimate of how same-sex households stand prior to the ruling.

Overall, the Census reports around 646,000 same-sex households in the U.S., which is just 0.6% of the country’s 117 million households. Of the same-sex households, 51% are female couples and 49% are male couples, which means that 0.3% of all households are male couples and 0.3% of all households are female couples. But many neighborhoods have a concentration of same-sex couples more than 10 times that national average.

So, given that the slowdown in household formation remains one of the ongoing challenges for the housing and mortgage industry, today’s decision certainly opens the door for a new wave of household formation.

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