NEW YORK (MONEY Magazine) - Are home values in America's biggest cities out of whack with the rest of the country?

Chris Mayer, a finance and economics professor who heads the Milstein Center for Real Estate at Columbia University's business school, tackled that question by looking at price changes in 129 cities since 1940.

He spoke with MONEY's Cybele Weisser about his study, "Superstar Cities," which concludes that despite the recent boom, prices in most big U.S. cities have remained in line with long-term trends.

Q. What are superstar cities?

A. They are cities with persistently low new-housing supply and high price growth -- an average of one or two percentage points a year more than other cities over decades. In a given year, that sounds small. But over a 60-year period, that extra growth causes prices in superstar cities to increase three times as much as those in the rest of the country.

Q. So why do their prices grow so fast?

A. To be a superstar city, you need two things: limited ability for new construction and big demand. Boston, L.A., New York, Seattle and San Francisco are all good examples.

San Francisco is the extreme example of a superstar city: Since 1940, housing prices have increased 2.1 percent more each year than they have in other cities. As a result, you see increasingly rich people moving in and relatively poor people moving out. These cities are simply attractive places for high-income people to live.

Q. Does that make real estate in these cities immune from a price drop?

A. Not at all. If interest rates go way up, we will see some temporary declines. But there is no evidence that Boston, New York and San Francisco are in a bubble. These cities have appreciated at higher rates than other places for 60 years and will continue to do so.

Q. What cities are running ahead of historical growth rates right now?

A. I think things have gotten out of hand in South Florida. Southern California also looks a little overheated.

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