TY - JOUR AU - Gyourko,Joseph AU - Mayer,Christopher AU - Sinai,Todd TI - Superstar Cities JF - National Bureau of Economic Research Working Paper Series VL - No. 12355 PY - 2006 Y2 - July 2006 UR - http://www.nber.org/papers/w12355 L1 - http://www.nber.org/papers/w12355.pdf N1 - Author contact info: Joseph Gyourko University of Pennsylvania Wharton School of Business 3620 Locust Walk 1480 Steinberg-Dietrich Hall Philadelphia, PA 19104-6302 Tel: 215/898-3003 Fax: 215/573-2220 E-Mail: gyourko@wharton.upenn.edu Christopher J. Mayer Columbia Business School 3022 Broadway, Uris Hall #808 New York, NY 10025 Tel: 212/854-4221 Fax: 212/854-8776 E-Mail: cm310@columbia.edu Todd M. Sinai University of Pennsylvania, Wharton School 1465 Steinberg Hall - Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104-6302 Tel: 215/898-5390 Fax: 215/573-2220 E-Mail: sinai@wharton.upenn.edu M2 - featured in NBER digest on 2006-07-17 AB - 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 %u201Csuperstar cities.%u201D 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. ER -