Widening cost gap

One striking finding in the Harvard report is the gap in home values that’s widened since 2000, well before the market hit its boom-era highs. When adjusted for inflation, prices in markets along the East and West coasts have vaulted more than 40 percent since 2000. By contrast, values in the Midwest and South have declined.

Among the markets where prices remain well below their housing-boom peaks: Las Vegas, Chicago, Detroit and Tampa, Florida. By contrast, home values have risen far above their previous highs in Denver, San Francisco and Austin, among other markets.

“If you go back to, say, 1970 and you look at the differences in house prices across market areas, they were not nearly as extreme as they are now,” Herbert said. “It’s a function of income inequality and how much the differences in income have grown.”

In addition, regulatory constraints and a shortage of available land limit construction in many areas.