That doesn’t mean Los Angeles and San Francisco are in any danger of turning into Detroit and Buffalo. To the contrary, Gyourko calls them “superstar cities,” places that offer “a rare blend” of stimulating leisure activities and a highly productive work environment. A life that looks “rushed” and “materialistic” to the folks headed for North Carolina feels exciting and creative to die-hard urbanites. As a friend who recently moved from Manhattan to Santa Monica once said to me, “When people say a place is ‘good for raising children,’ that means it’s boring.” But not everyone with a taste for urban amenities can afford the superstar life. As the number of affluent Americans grows, the rich are bidding up the price of living in these special places, increasing the gap between the superstar cities and everyplace else.

People in these high-price areas respond that they have no control over housing costs. Everyone wants to live in California, and the land is already full of houses. This isn’t Texas, with its miles and miles of empty old cotton fields. True, land is cheaper and more plentiful in less-developed parts of the country. But high-price areas could put many more units on the land they have. Research by Gyourko, Glaeser, and Raven Saks found that the lowest-density areas around expensive cities tend to have the least new construction and the most land-use restrictions. It’s actually somewhat easier to build in more densely populated towns and neighborhoods—the opposite of what you’d expect if a shortage of empty land were the problem.

Some of the higher price of L.A. real estate does reflect the intrinsic pleasure of living there, as I’m reminded every time I walk out my door into the perfect weather. Some of the price reflects the productivity advantages of being near others doing similar work (try selling a screenplay from Arlington, Texas). All of these benefits—and the negatives of traffic and smog—are reflected in the price of land.

But what exactly is that price? Consider two ways of computing the price of a quarter acre of land. You can compare the value of a house on a quarter acre with that of a similar house on a half acre. Or you can take the price of a house on a quarter acre and subtract the cost of the house itself—the price of construction. Either way, you get the value of an empty quarter acre. The two numbers should be roughly the same. But they aren’t. The second one is always bigger, because it includes not just the property but the right to build. Expanding your quarter-acre lot to a half acre doesn’t give you per- mission to add a second house.

In a 2003 article, Glaeser and Gyourko calculated the two different land values for 26 cities (using data from 1999). They found wide disparities. In Los Angeles, an extra quarter acre cost about $28,000—the pure price of land. But the cost of empty land isn’t the whole story, or even most of it. A quarter- acre lot minus the cost of the house came out to about $331,000—nearly 12 times as much as the extra quarter acre. The difference between the first and second prices, around $303,000, was what L.A. home buyers paid for local land-use controls in bureaucratic delays, density restrictions, fees, political contributions. That’s the cost of the right to build.