Divergent housing price trajectories in U.S. metropolitan areas

Written By H. Pike Oliver

A Substack post by Pete Saunders highlighted a groundbreaking study by Lyons, Shertzer, Gray, and Agorastos that traces housing prices in 30 metropolitan areas across the USA from 1890 to 2006, using over 2.7 million classified ads. [1} The data reveal a profound divergence in urban housing markets, particularly between Midwestern and coastal cities.

Nationally, real housing prices remained mostly flat from 1890 to 1940, with homeownership functioning more as a stable commodity than an appreciating asset. However, post-1970—especially between 1997 and 2006—real capital gains in housing became significant, transforming homes into speculative investments in many regions.

The study documents a dramatic rise in housing prices in West Coast and Sun Belt cities (e.g., Los Angeles, San Francisco, San Diego), in contrast to Midwestern cities (e.g., Detroit, Cleveland, Pittsburgh). For instance, Detroit ranked first in housing prices in 1940 but fell to 26th by 1980, while Los Angeles rose from 25th to second.

A key observation from Saunders is that affordability in the Midwest stems not only from economic stagnation but also from an oversupply of suburban housing built during decades of population decline. Post-WWII suburban expansion continued even as central cities lost residents, leading to devalued urban housing stock and a bifurcated metro housing market.

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Footnote and chart source

[1] Ronan C. Lyons, Allison Shertzer, Rowena Gray, and David N. Agorastos, The Price of Housing in the United States, 1890–2006, NBER Working Paper No. 32593 (Cambridge, MA: National Bureau of Economic Research, 2024), https://www.nber.org/system/files/working_papers/w32593/w32593.pdf..

H. Pike Oliver

H. Pike Oliver focuses on master-planned communities. He is co-author of Transforming the Irvine Ranch: Joan Irvine, William Pereira, Ray Watson, and THE BIG PLAN, published by Routledge in 2022.

Early in his career, Pike worked for public agencies, including the California Governor's Office of Planning and Research, where he was a principal contributor to An Urban Strategy for California. For the next three decades, he was involved in master-planned development on the Irvine Ranch in Southern California, as well as other properties in western North America and abroad.

Beginning in 2009, Pike taught real estate development at Cornell University and directed the undergraduate program in Urban and Regional Studies. He relocated to Seattle in 2013 and, from 2016 to 2020, served as a lecturer in the Runstad Department of Real Estate at the University of Washington, where he also served as its chair.

Pike graduated from San Francisco State University's urban studies and planning program and received a master's degree in urban planning from UCLA. He is a member of the American Planning Association and the Urban Land Institute and a founder and emeritus member of the California Planning Roundtable.

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