The Interesting Influence Same-Sex Couples Have on Home Values (& How It Impacts Investors)

by | BiggerPockets.com

Denver is getting ready for the 3rd largest Pride festival (and 7th largest parade) [1] in the United States this month. Over the celebratory weekend, we welcome 385,000-plus participants. [2]

As someone that has lived in the city since 2000, I can report that the parade is a major point of *pride* for the entire community. It’s big, it’s fun, and there are a ton of great parties. The city just seems happy about celebrating love and/or happy about the economic benefits of love ($25 million).

Before I get into elaborating more on that last point though, I’d just like to point out that there’s a pretty clear trend regarding where people want to live and progressive attitudes, which is why people on this site don’t talk about Alabama much.

Do Gay Populations Boost Housing Prices?

The idea has existed for quite some time that when gay people (and more specifically, gay men) seek out a neighborhood, the real estate prices increase. A study by Duke posits this happens for two reasons.

First, the gay community increases the aesthetic of a neighborhood. Second, their tolerance and open culture leads to the promotion of ideas and entrepreneurship, which turns into higher incomes which turns into increased housing prices (familiar with San Francisco?). [3]

A third point, oddly not mentioned in the study but definitely relevant, is that the demographic for a long time was prevented from having children (either via science or adoption) and so they had more expendable income.  

Related: Lead Generation—What Makes you Different Can Make You Rich

young female hands with LGBT rainbow ribbon wristbands holding craft wooden house

Sometimes Yes, Sometimes No

So, is this urban legend true? When the gay community shows up, do the housing prices increase? The answer is it depends.

According to the Harvard Business Review, if you are in a liberal leaning community, the housing prices increase on average 1 percent for every same sex couple per 1,000 households in a new neighborhood. Butttttttt… in traditionally conservative areas, it results in a 1 percent drop in housing prices. [4]

(A timeframe here would have been useful. Without one, we’re left wondering: does the continuing influx of the gay population increase housing prices over time despite the initial drop? If so, how much time?)

Related: Most Expensive U.S. Markets Have Appreciated 2x as Fast as Least Expensive in Past 30 Years

What’s the practical application for this information? For investments, you might want to look for cities that are emerging as destinations for the LGBTQ community. For instance, on TripSavvy, Indianapolis, Detroit, and Fort Worth are all listed as a good place to visit as a gay traveler. [5]

Find communities that are fairly new to launching pride parades but having a great turn out, like Columbus, Indiana—Mike’s Pence’s hometown. [6] Seek out states that offer full protections for the LBGTQ community, and find the cities within that state that haven’t totally embraced it yet but are leaning that way. [7]

Takeaway? Diversity is not only the right thing to do, but it’s also the financially smart thing to do.

Resources

1 https://en.wikipedia.org/wiki/PrideFest_(Denver)

2 https://en.wikipedia.org/wiki/PrideFest_(Denver)

3 https://sites.duke.edu/urbaneconomics/?p=1054

4 https://www.theatlantic.com/politics/archive/2012/07/your-gay-neighbors-really-are-raising-your-real-estate-values/260437/

5 https://www.tripsavvy.com/underrated-in-america-for-gay-travelers-1417711

6 https://www.thrillist.com/travel/nation/new-pride-parades-events

7 https://www.freedomforallamericans.org/states/

What do you think?

Comment below!

 

About Author

Erin Spradlin

Erin Spradlin co-owns James Carlson Real Estate. She loves working with first-time homebuyers for their enthusiasm and excitement, and loves working with investors because she's a fellow spreadsheet nerd. She and her husband own three properties in metro Denver and are currently in the process of acquiring a duplex in Colorado Springs. You can find Erin's blogs here: https://www.biggerpockets.com/renewsblog/author/erinspradlin/ and her airbnb video series here: https://www.youtube.com/playlist?list=PLgSUZKLPRI9tK3Vd-qpH3Sk2Rh-_pIrNN.

20 Comments

  1. Eric Carr

    So true! I’ve been saying this for 20 years, “follow your gay friends”! Growing up in LA, I’ve seen what happened in West Hollywood and Long Beach, Palm Springs, mucho in Boyle Heights. Not that all of these areas was bad before, but what a difference.

    I grew up in LA, most of my friends growing up, were gay men and women, so I think it became inherent that they make everyone more stylish and happy.

  2. Kurt Buchert

    Ah, annoying left wing virtual signaling… I thought we were immune from this in the BP venue, but I was wrong. Bigger Pockets usually stays away from anything political (thank you), but I guess that’s over so let’s play ball. The author insinuates that more traditional & religious parts of our country don’t “celebrate love”…yeah, ok. She does seem to embrace generic feel good slogans which mean nothing.
    Her blatant religious bigotry & ignorance of the founding principles of the nation aside, the premise of her article is beyond dumb. There are many traditional parts of the country with flourishing real estate markets, including Alabama….yes Alabama, the butt of her joke. It’s Southern, it’s Christian…they must be backwards & their real estate market must be awful! Who would live there??? Well, lots of wonderful people actually.
    What’s even more comical is how she lists DETROIT as a good example…DETROIT!!!! It’s our nation’s only 3rd world city with a sky high murder rate, crumbling houses, terrible schools, high taxes, etc..
    Sidenote: her bio says she invests in Colorado Springs, the capital of evangelical Christianity…she can’t even put her money where her mouth is.

    • Erin Spradlin

      Well, politics has a way of being in everything (especially money) and as a trend line- more progressive, urban cities (and their metros) command more money than places that have the vestiges of racism and ban abortions. I didn’t say that Alabama was devoid of anywhere good to invest, I just suggested that its regressive politics made it a less popular place to invest than most places that adopt inclusivity. And I didn’t say that because saying that would be stupid like it’s stupid to make a false argument and then argue against it.

      • Kurt Buchert

        Yes, killing innocent babies, being bigoted against religious people, & having Drag Queen story time for the children you don’t kill is SO PROGRESSIVE. You’re the Elon Musk of social progress!! Your next article will be how enlightened socialism is….we should all invest in Venezuela, the new Detroit.

      • Vaughn K.

        Well, I definitely don’t want to get into the political stuff mentioned above, too much of a minefield… But Erin, you may wish to look at the trends of where people are moving…

        Basically every high tax, high regulation coastal state, and the few similar areas not on the coasts, is in fact losing population to the traditionally “boring” parts of the country. Many of these cities/states are having net population drops because of all the people moving, some are barely inching up because of the local births, but have more people choosing to actively move away from them than to them. CA, NY, Illinois etc are all seeing this, and I even saw Washington state flipped from net positive inflow to net negative in 2017 IIRC according to a study. People are flocking to Texas, the southwest, the south, and even the midwest. Basically everywhere that isn’t an overpriced over taxed coastal area. This trend has been going for years now, but seems to be accelerating the last couple years.

        People seem to be realizing the horrendous personal costs of living in insanely high cost of living areas with equally high taxes are not quite worth it. The value proposition is simply not the same as when cost of living was semi reasonable in a lot of the coastal areas.

        I currently live in one of the “coolest” cities in the USA according to many folks… And it has become an unlivable mess in recent years, so I plan to be out of here in the next year or two.

        The inflated coastal bubbles will not last much longer IMO, and there is far more upside in other parts of the country that have “good bones” with respect to future potential. A few of them have already gone from “lame” to “cool” (Nashville, Louisville, Atlanta, etc) but there are a lot of other decent places that will likely be added to the “Maybe it’s not so horrible after all!” list in the near future I think.

        Any which way, the crazy growth of a handful of coastal markets seems to be petering out according to pretty much any stat one cares to look at. Some cities may see more modest growth still in the future, but I suspect the current trends will continue for practical reasons if nothing else. It’s kind of lame to make 6 figures in a “cool” city and not even be able to afford a beater condo!

  3. Eamon Morgan

    Interesting article, Erin! I’ve noted a similar trend in my area, albeit anecdotally.

    Kurt, the rookie, might actually contribute to BiggerPockets in a more meaningful way at some point. In businesses we must be able to listen to understand and not listen just to respond. If you don’t have the ability to emotionally manage the idea of another opinion then this is not the forum for you. Please keep an eye out for an article on social skills.

  4. Alison Walker

    Great article Erin. Thanks for sharing this. As its Pride Month, this is timed really well. As someone from the LGBTQ community I would agree that property values tend to increase as LGBTQ folks move into an area and revitalize homes and businesses. I do think paying attention to a demographic that might be drawn to an area is important when considering real estate purchases. And to NOT be aware of any demographic with a large disposable income would be a little short sited. Again, thank you and great article.

  5. Vaughn K.

    Correlation does not always equal causation. Since it is Pride month, Zillow ran an article the other day that was talking about this subject, and depending on the city sometimes the gay areas were far less expensive than the surrounding ones, other times they were some of the most expensive areas in the metro…

    But one thing they mentioned was that since LGBTQ folks tend to flock to major urban centers, a lot of the stats about them living in the really expensive areas may be backwards causality wise… Those people move to expensive and up and coming areas, not that they make them so. Traditionally speaking most gay couples didn’t have kids, and tended to want to live in cool areas with a lot of adult activities (night life etc), and essentially moving to cool areas, along with the overall urban revitalizing trend, you end up with statistics like the ones we have.

    Who can really say though without some really fine grained data. *shrugs* I suppose either way if a ton of gay people are into an area, it may well still be in indicator that it ticks the boxes they have on their checklist, and they could be a bellweather demographic like upper middle class young professionals or what have you.

      • Vaughn K.

        Sorry, I don’t really bookmark and save links to most stuff I read. It wasn’t that long ago so you may be able to just scroll through recent articles on their website, or perhaps try googling with relevant keywords. It was largely about how not all gay neighborhoods are the most expensive… I don’t remember the exact title. Wish I could help more.

        • Erin Spradlin

          Interesting. My article is cited and backed up by other articles, so I think it would be useful to have that in the comments as well- especially if it directly contradicts this article. Thanks.

        • Vaughn K.

          It seems like you may be getting a bit defensive… I wasn’t contradicting the article. On average gay neighborhoods ARE more expensive. But they aren’t ALWAYS more expensive, as your own article says.

          And correlation does not equal causation is a pretty well established thing… The data you cite is all technically correct, however what that data means is open to interpretation. Did gay people move to cool areas early because they were cool and obviously up and coming? Or did gays move in FIRST and make them cool directly by their presence? There is a difference, if one is getting specific. Gay people moving into up and coming areas early is not the same as them moving in and making those areas up and coming.

          Nobody has ever shown me data that proves it one way or another, and that’s what this other article threw in in a couple sentences, it wasn’t the main thrust of the article. That was more just that not all gay neighborhoods are the most pricey.

          Anyway, I tried looking it up but couldn’t find the exact one. I did find a couple similar ones that mention some of the same stats… But I don’t have time to dig to find the exact article when it’s not popping right up on google.

          https://www.zillow.com/research/gayborhood-home-premiums-24233/

          https://www.zillow.com/research/affordably-priced-gayborhoods-24335/

          It’s a minor point any which way… Whether they’re “making” places cool, or simply early adopters who notice cool trends and leap in early, is not much of a practical difference.

        • Erin Spradlin

          I am not questioning your article, and I think it’s a really interesting debate worth having. Additionally, if anyone was going to make investments off that info, it would be important for them to know that there are competing theories on this topic.

          Where I think we disagree is approach. I think it is important to cite references and useful for everyone else to have the link so they can make their own decisions and not just base it off your (or my) interpretation. And where I got annoyed was when you made time to comment but suggested you did not have time to find the article. That’s all. Thank you for sharing it.

        • Vaughn K.

          Well, I wasn’t writing an actual article or anything like you were… I was just posting in a comments section on a website! If I was writing articles I would be citing things, but as I mentioned I don’t bookmark everything interesting I read on the internet, probably because I’m not a writer who will need the cites later.

          I did try to find it by doing a few google searches, but it didn’t pull up the exact one. The internet can be a funny thing sometimes. Google likes to pull up what it thinks you want to see, not always what you’re actually looking for! Google liked those 2 articles for every variation of keywords I tried. *Shrugs* Taking a minute to write a comment is a lot quicker than trying 600 keyword variations in the hopes that Google will kick out one particular article on a subject that there are probably hundreds if not thousands of articles about. It’s just lost to the ether for all practical intents and purposes since I can’t remember the exact article title.

          I’d try to take it easier on commenters in the future though! 🙂 Most people don’t make posts like they’re writing in a scientific journal, they simply state things they have seen/heard before. Comments aren’t generally meant to be up to the same standards as white papers, or even articles. I could spout off 1,000 facts I know to be 100% true, and in many cases I wouldn’t know off hand where to point somebody to verify it, other than to suggest they do a search for relevant keywords. I just know things because I have seen them, as everybody does.

  6. John Murray

    I could care less what others do in personal lives. The true entrepreneur will find what makes them profit. Social norms will always dictate the a market place, fringe elements will propel a society to grow. Without change and open thinking a society will become often violent and very self righteous. This is what is happening to middle America right now, intolerance is being fueled by hate, insecurities and the fear of societal changes. Nazi Germany was fueled by the same fears, their society is still paying for their human feelings of insecurity. America is better than than that , the most deserve society in the world that is why it works so well, much to the disappointment of middle America. Change is coming and middle America will adapt they do not have a choice.

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