Building Coalitions: The Politics of Housing Supply

Why do some regions build more homes while others hold back? I argue that electoral incentives of local governments influence housing supply. Conservative governments restrict multi-family housing when they anticipate an influx of left-leaning newcomers, while left-leaning administrations embrace such projects to expand their electoral base. These partisan effects are most pronounced in commuter zones, where in-migration can reshape the electorate, and weaker in dense city centers or peripheral municipalities. Using an original nationwide panel of German municipalities (1996–2020) and a difference-in-differences design, I provide observational evidence on the effect of local government partisanship on housing supply. A large-scale survey experiment and interviews with local politicians corroborate the mechanisms. These findings suggest that partisan electoral incentives – beyond zoning rules or NIMBYism – help explain persistent housing shortages, highlighting the central role of local political decisions in shaping the geography of inequality.