Real Estate Papers

Document Type

Journal Article

Date of this Version

11-2013

Publication Source

American Economic Journal: Economic Policy

Volume

5

Issue

4

Start Page

167

Last Page

199

DOI

10.1257/pol.5.4.167

Abstract

We document large long-run differences in average house price appreciation across metropolitan areas over the past 50 years, and show they can be explained by an inelastic supply of land in some unique locations combined with an increasing number of high income households nationally. The resulting high house prices and price-to-rent ratios in those "superstar" areas crowd out lower income households. The same forces generate a similar pattern among municipalities within a metropolitan area. These facts suggest that disparate local house price and income trends can be driven by aggregate demand, not just changes in local factors such as productivity or amenities.

Copyright/Permission Statement

Copyright © 2013 by the American Economic Association. Gyourko, Joseph, Christopher Mayer, and Todd Sinai. 2013. "Superstar Cities." American Economic Journal: Economic Policy, 5(4): 167-99.

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Date Posted: 27 November 2017

This document has been peer reviewed.