Housing costs: The real reason houses are so expensive is right beneath your feet.

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Housing in America has become ridiculously expensive. The typical American home costs more than five times the median household income, with the ratio pushing into double digits in places like South Florida, coastal California, and Hawaii. To talk about the high cost of housing, however, is to misidentify the problem. While contemporary builders face challenges like tariffs on materials, high interest rates, and a masked police force hunting down workers, it is not the houses that cost so much more than before—it’s the land beneath them.

In the priciest U.S. cities, three-quarters of the value of residential neighborhoods is just dirt. The aftermath of January’s Los Angeles fires shows one consequence of this bizarre situation, since victims’ insurance payouts (equivalent to the structure cost) are so much less than their mortgages (which include the precious land). Starting over elsewhere becomes a financially ruinous proposition.

Land is the subject of journalist Mike Bird’s smart and stimulating new book The Land Trap: A New History of the World’s Oldest Asset. The subtitle does not accurately reflect the book’s scope, which is short on the first 5,000 years of human history and concerned primarily with the tricky choices that contemporary societies face in the distribution, taxation, and regulation of property. But that’s for the best.

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“The reality of how land works leaves governments all around the world torn between irreconcilable goals,” Bird writes. “They are anxious to promote homeownership—which remains the aspiration of billions of families just as it has been since the demise of feudalism. At the same time, political leaders are desperate not to lose the support of the existing crop of owners, who are keen for the value of their real estate to rise.”

Cheap land enables affordable housing, population growth, stability, opportunity, and economic innovation. Expensive land enriches governments through sales, leases, and taxation and unlocks vast financial leverage for owners, since it is such an effective collateral to borrow money against. This is the “trap” of the title, one that developed nations have tried to avoid with little success. Rising land prices smother our ability to move, suppress fertility rates, stifle innovation, and hoover up resources that might be deployed elsewhere. But falling land prices make it hard to borrow money, send loans into default, eviscerate the tax collections that pay for public services, and prompt foreclosures, financial panic, and job loss.