Real-estate prices provide a clear indicator of the dominance of superstar cities, and the large gap between them and the rest. To get at this, I tracked housing prices in the more than 11,000 zip codes across America for which the real-estate firm Zillow has data. There are just 160 zip codes where the median home price was $1 million or more; 80 percent of them were located in the New York, Los Angeles, and San Francisco metro areas. All but four of the 28 zip codes where median home values were more than $2 million were located in or around these three cities: 11 in the San Francisco Bay Area, seven in LA, and six in New York. In 2016, 57 percent of homes in the Bay Area were valued at more than a million dollars, up from less than 20 percent of them in 2012. Meanwhile, 56 percent of the zip codes for which data are available have median home values of less than $200,000, and roughly 15 percent have median home values of less than $100,000.

One way to visualize the enormity of the gap between superstar cities and the rest can be seen in the figure below, which shows the number of houses one could buy in cities across the U.S. for the price of just one in New York’s pricey SoHo neighborhood. For the price of one SoHo apartment (with a median value of about $3 million) one could buy 18 homes in Las Vegas, 20 in Nashville, 23 in Atlanta, 29 in Detroit, 30 in Cleveland, 34 in St. Louis, and 38 in Memphis. The disparities are even more staggering when looking at specific zip codes. That one SoHo apartment is worth as many as 50 houses in parts of Toledo and 70 houses in parts of Detroit. In one neighborhood in Mahoning County, home of Youngstown, Ohio, a SoHo apartment owner could afford more than 100 homes.

How Many Houses Could the Price of One SoHo Apartment Buy in the Rest of the Country?

Martin Prosperity Institute | Data: Zillow (as of 2015)

The astronomical real-estate prices of superstar cities—and the staggering gap between these prices and those of most everywhere else—are the product of the underlying motor of capitalist development: a clustering force that pulls people and resources together. Two key things cluster in cities. First, and most obviously, is firms and industries. Big, populous cities develop thriving industry clusters, like finance in New York and London, movies in LA, fashion in Milan and Paris, and technology in the Bay Area. Even more importantly, skilled and ambitious people cluster in cities.

But this process generates another force that operates in the other direction: While clustering drives growth, it also increases the competition for limited urban space. The more things cluster in a city; the more expensive its land gets. The more expensive land and housing prices become, the more people and businesses get pushed out.

This land crunch is not just a consequence of natural economic forces—that is, of limited supply in the face of surging demand. It also stems from the efforts of urban landlords and homeowners to restrict what is built, and in doing so to keep the prices of their own real-estate holdings high. Over the past several years, a growing chorus of urban economists has decried the way that NIMBY sentiment (NIMBY being an acronym for “not-in-my-back-yard”) keeps urban housing prices unnecessarily high. Traditionally, NIMBYs were concerned residents who were motivated to keep “bad” things, like prisons or waste-treatment plants, out of their own desirable neighborhoods. While there is certainly a place for neighborhood preservation and environmental conservation, NIMBYs do more than that: Well-intended or not, when they reflexively block any and all development, they preserve high housing values but put a brake on the very clustering that produced them. As the Bloomberg View writer Noah Smith put it, “It’s landlords, not corporate overlords, who are sucking up the wealth in the economy.”