Year: 2006
Type: report
Abstract: Differences in house price and income growth rates between 1950 and 2000 across metropolitan areas have led to an ever-widening gap in housing values and incomes between the typical and highest-priced locations.We show that the growing spatial skewness in house prices and incomes are related and can be explained, at least in part, by inelastic supply of land in some attractive locations combined with an increasing number of high-income households nationally.Scarce land leads to a bidding-up of land prices and a sorting of high-income families relatively more into those desirable, unique, low housing construction markets, which we label "superstar cities." Continued growth in the number of high-income families in the U.S. provides support for ever-larger differences in house prices across inelastically supplied locations and income-based spatial sorting.Our empirical work confirms a number of equilibrium relationships implied by the superstar cities framework and shows that it occurs both at the metropolitan area level and at the sub-MSA level, controlling for MSA characteristics.
DOI: 10.3386/w12355
Authors: Joseph Gyourko, Christopher Mayer, Todd Sinai
Institutions: University of Southern California, National Bureau of Economic Research, Harvard University, University of South Carolina, Federal Reserve Bank of Philadelphia, Columbia University, University of Pennsylvania, London School of Economics and Political Science, University of California, Berkeley
Language: English
Topic: Housing Market and Economics
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4243203340