New data shows the city where housing prices have skyrocketed 16.7 times higher in the last hundred years - a rate dwarfing every other major city including San Francisco and New York City.

San Diego, the California city a half hour drive from the US-Mexico border, saw homes appreciate a whopping 1,572 percent from 1890 to 2006 when adjusted for inflation, according to a research tool created by the Federal Reserve Bank of Philadelphia.

Home prices in San Francisco, routinely ranked as one of most expensive cities in the country to live in, only went 5.6 times higher, or an increase of 462 percent, over the same time period.

By comparison, real estate in New York, Boston and Los Angeles nudged up an average of 3.6 times.

Here's why San Diego has seen such an shockingly outsized surge in its home prices.

The Philadelphia Fed compiled the data it used from home sales prices listed in millions of newspaper real estate listings during the tail end of the 19th century, the entire 20th century and the first six years of the new millennium. 

The listings were adjusted for inflation and changes in home quality over time, and the data stops after 2006 because that's when listings generally moved online. 

A closer look at the data reveals that homes in San Diego were far cheaper than buying one in New York, Boston, and San Francisco until around 1940, setting the west coast city up for its huge surge over a hundred years later.

San Diego was also fledgling city compared to these giant, industrial metro areas throughout most of the late 1800s and early 1900s.

In 1890, the first year the Philadelphia Fed was able to pull data, New York had a population of just over 1.5 million, whereas San Diego was only about 16,000-strong.

To compare these two cities is practically unfair at this time period, as New York already was already well on its way to becoming an urban powerhouse. 

It had the beginnings of skyscrapers such as the 18-story New York World Building, which opened in December 1890. 

In terms of infrastructure, the Brooklyn Bridge opened in 1883, becoming the longest suspension bridge in the world at the time. The subway system would first open in 1904.

And by 1907, the city had more than 400 miles of asphalt pavement, opening the way for automobiles to start taking over, according to The New York Times. 

By comparison, San Diego County as a whole only reached 250 miles of paved road by 1929, nearly two decades after, according to the county's Department of Public Works.

This is to say that an early 1900s home in New York, a bustling, lively area with jobs and many means of transportation, was clearly a lot more valuable than a home in San Diego would be at that time.

That began to change in the mid 1940s - the peak of World War II - and home prices in all four cities began to converge.

By this point, San Diego's population had surged past 200,000 and was key to the America's war effort in the Pacific theater with its large, fully-equipped naval base. 

The trend of San Diego real estate keeping pace with other major cities would continue until the 1970s and 1980s when prices shot up. The same phenomenon occurred in San Francisco.

'California was, even before the '60s and '70s, a bit more expensive than the rest of the country, but it really diverged around … the late '60s onward,' MetroSight economist Issi Romem told the San Francisco Chronicle.

The Philadelphia Fed doesn't explain why homes in California got so much more costly during the '70s and '80s, but Romem said it had a lot to do with environmental regulations and tax breaks for farmers.

In the 1960s, California created 'the world's first coastal protection agency,' which protected the San Francisco Bay Area from pollution and overdevelopment.

The push toward conserving the environment only strengthened in 1970 when state lawmakers passed California Environmental Quality Act.

Critics say this law hamstrings the construction of houses and apartments to this day because under it, local planning boards are required to evaluate the environmental impact of any new project.

 And five years earlier in 1965, the state legislature passed the Williamson Act, which cut property taxes to farmland owners who agreed not to further develop their land.

All of this put together has created an environment in California where developing new housing stock is incredibly difficult. 

This keeps the single-family home supply low and demand for them high, which is why it's common to see what looks like a starter home in major California metros going for over $1 million.

'Single-family areas basically become untouchable,' Romem said. 

'This is the story that explains why California homes are in the millions (of dollars) whereas homes in Texas are in the hundreds of thousands.'

The only city in Texas the Philadelphia Fed examined was Dallas, and there, home prices were actually 60 percent cheaper in 2006 than they were in 1890.

Due to high living costs, California's population decreased steadily from 2019 until May 2024 when it had a minor bump of 67,000 people.

Meanwhile, Texas is growing rapidly, adding some half a million people to its population last year. 

And many of the people contributing to the growth of Texas are fleeing from California, seeking to take advantage of homes that are a third less expensive based on each state's median price.

Recent trends also suggest there could be a major collapse in real estate prices across the southern US, which could open up the opportunity for first-time buyers to make a bid.

This is certainly not the case in San Diego, where the average home is worth over $1 million, up 11.5 percent in the past year.