I believe that in the 1950s there wasn’t much of a difference between California and the heartland. The price gap widened more and more in the last 50 years.

My theory is that new immigrants on the Coasts drove up prices. Most immigrant come from poor countries where the home price to income ratio is very high. Relative to income, houses are cheap in America. I believe, this along with other reasons explains the home prices in coastal metropolitan areas.

For example, lets look at Little Saigon in Orange County (Santa Ana, Garden Grove area). Vietnamese immigrants are willing to pay $700k lousy old houses. Houses in Vietnam cost about $100k but income is only about $100-$200 per month. How do people manage? They stretch and find ways.

It’s the same for Hispanic, Chinese, Eastern European, and other immigrants.