In the last 30 years, Silicon Valley homeowners earned enough to buy a Rolls Royce, while in the rest of the country they earned a Hyundai

Location, location, location. What a difference a city makes.

A new report published by the residential real estate site Trulia finds housing markets are following incomes into record levels of inequality. If you had bought a house 30 years ago in Dayton, Ohio, it would net you $50K in appreciation today. A home in Silicon Valley? You could bank almost $1 million.

Trulia calls it the “Great Housing Divergence”: the value of homes in the most expensive US markets are rising much faster than they are in the least expensive ones.

That’s a major departure from economists’ expectations that home prices will “catch up” to some degree across different metropolitan markets. Today, exactly the opposite is happening. Those who can afford expensive homes are capturing far more appreciation value compared to those outside top markets.

“The U.S. housing market is growing more unequal,” writes Trulia’s chief economist Ralph McLaughlin. “Regional disparities in home price growth may be effectively driving a geographical gap in wealth generation.”

The difference is stark. Homeowners in cities such as Rochester, New York or Dayton, Ohio have seen their homes’ values rise between 85% and 101% since 1986, an increase worth about $63,000. By contrast, homes prices in cities like San Francisco have jumped 558% delivering $899,000 to the median homeowner there. The biggest gains were seen in Denver, Colorado; Washington DC; and cities on the west coast and in the northeast. The lowest returns were in metro areas in Texas, Oklahoma, Ohio, and Tennessee.

Income growth alone couldn’t account for the disparity. Trulia found a second factor to help explain what’s going on here: how much housing is built in response to rising demand. In areas with rising incomes and plenty of new home construction—such as Sarasota, Florida. and Austin, Texas—house prices didn’t increase much. But cities with growing incomes that didn’t have much new construction saw housing prices soar, effectively transferring more wealth to existing homeowners at the expense of younger and poorer residents.

Over the last thirty, these markets should have moved back in line—the meteoric trajectory of the most valuable homes typically gets harder to sustain as overall market values increase, writes McLaughlin. In theory, that means the top and bottom markets eventually move back towards each other. That’s not happening. Instead, the top and bottom keep stratifying, similar to how wealth is accruing to top earners in the US.

And the ongoing accumulation of housing wealth in affluent areas promises to make those broader financial disparities more permanent, McLaughlin told Quartz. “We may need to rethink policy,” he said. First, there’s the mortgage tax deductions: The US government offers significant deductions on home mortgages, which automatically bestows preferential treatment on those wealthy homeowners (with high monthly mortgages) who already benefit the most from rising home prices. Secondly, there’s the issue of inheritance. Essentially, luck will determine who in the next generation will reap the long-term reward of expensive real estate. A child born to homeowner parents in Chicago will see a fraction of the inheritance as those in San Jose, California. “This has serious implications for inter-generational wealth disparities,” McLaughlin said.

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