The Housing Chronicles Blog: Is the GOP-Centered Building Industry Stuck in the Past?

Friday, October 18, 2013

Is the GOP-Centered Building Industry Stuck in the Past?

As I write this column today without loyalty to any political party, the federal government has finally began creaking back to life after being held hostage for 16 days by a Congress seemingly out of touch with the country’s unique role in the global economy.  Not surprisingly, this same Congress earned an approval rating of 11 percent from a poll taken immediately after the shutdown during the early days of October.

While the same poll showed Republicans with an approval rating of 28 percent (down 10 percentage points from the previous month), Democrats also took a four-point hit, with their approval rating edging down to 43 percent.  Poll respondents also showed 62 percent of them disapproving of Republicans, while Democrats split the country more evenly at 49 percent.  Recent figures on the economic damage from the temporary closure have been estimated at $24 billion, and fourth quarter GDP growth estimates have been cut from 3.0 to 2.4 percent.

I only mention these figures because I’ve always been interested in the long-standing connection between the building industry and GOP even when their policies – especially at the national level -- didn’t necessarily coincide with the best interests of the housing market. To be sure, at the local level it certainly makes sense for builders to support politicians who share their goal of making it easier to develop new communities for growing populations, but on the national political stage it’s a far different story.

In the 2012 campaigns, just over three-quarters of the NAHB’s BuildPac funds went to the GOP – far higher than the 55 percent from the National Association of Realtors or the 57 percent from the Mortgage Bankers Association.  Looking ahead to the 2014 elections, while the GOP money lead from BuildPac has shrunk to 67 percent, it’s still far higher than the 48 percent planned by the NAR.

So just what is our industry getting for all of this money?  It’s a fair question:  Remember the $787 billion stimulus package that President Obama wanted to pass shortly after his inauguration?  It passed without a single Republican vote in the House, and just three in the Senate.   Soon thereafter, a separate law to allow judges the freedom to modify mortgages on primary residences to prevent a cascade of foreclosures was also rejected by most Republican legislators.  Meanwhile, GOP candidate Mitt Romney’s plan for the housing market was both clear and simple:  let an unfettered free market sort everything out on its own, even though 83 percent of the sub-prime loans which tanked the housing market were made by mostly unscrupulous private firms.

But this concern isn’t just about money:  it’s just as much about demographics.  While the country continues to become increasingly diverse along racial, ethnic and religious lines, the management of building companies looks much like it has in the past:  white, middle-aged (with a median age of 54 in 2011 according to a NAHB membership survey), 93 percent male and, given the historic connection with the GOP, with what I assume are traditional values handed down from previous generations.

For the overall construction and extraction industries, however, it’s a different story: while over 97 percent of these jobs were still held by men, less than 10 percent of them were Caucasian alone, while nearly 16 percent were Hispanic, 5.7 percent were African American and 2.6 percent were Asian.  It’s an even larger contrast with the general U.S. population, which as of July 2012 was 77 percent Caucasian, 17 percent Hispanic, 13 percent African American, 5.1 percent Asian and 2.3 percent two or more races.

By 2043, the Census Bureau estimates that the country will no longer be a white-majority country, fueled today by significantly higher birth rates among multi-racial couples, Asians and Hispanic immigrants.  About 11 percent of the country’s counties are currently “majority-minority” across the southwest, southeast and northeast.  As soon as next year, a majority of children nationally under age five will be of non-Caucasian descent.

So why is this important?  Because the GOP has a substantial image problem among minority voters, with just 11 percent of non-white voters declaring allegiance to the Republican party as of mid-2012.  And when the NAHB’s primary PAC is still targeting two-thirds of its funds towards Republican candidates, it’s hard to ignore this huge political disconnect between supplier and buyer.

Sure, you could always hire consultants to tell you how to market to specific minority groups, but wouldn’t it be more practical for this industry to better mirror the general population?

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