“Sort Selling”: Political Polarization and Residential Choice

Descriptively, homeowners are more likely to sell their homes and move when their next-door neighbors are affiliated with the opposite political party. We use a novel, new-next-door-neighbor identification strategy along with rich demographic control variables and time-by-geography fixed effects to confirm causality. Consistent with a partisanship mechanism, our results are strongest when new next-door neighbors (i) are more likely to be partisan and (ii) live especially close by. Our findings help explain increases in political segregation, improve our understanding of residential choice, and illustrate the importance of political polarization for economic decision-making.