This is a pretty good read and explains that it's not a supply issue.

https://pluralistic.net/2024/10/24/i-dream-of-gini/

A paradox: in 1970, everyday Americans found it relatively easy to afford a house, and the average American house cost 5.9x the average American income. In 2024, Americans find it nearly impossible to afford a house, and the average American house costs…5.9x the average American income.

Maybe because with Airbnb instead of renting out a house for $2000 a month to someone looking to live there they can rent it out for $1000 a week to tourists and double their profit.

a home I bought in 2010 for around 300k is now 600k+, I couldn't afford it now, even though it's exactly the same. we upgraded and expanded the kitchen while living there, added a bathroom. so... yeah, wtf.

1. Land is scarce where people want to live, it's always going to get more expensive as more people want to live there.
2. Low interest rates caused large investment firms to seek higher rates by being rental owners instead of mortgage owners. This forced up rent to make returns on investment. As the realities of being a landlord are realized this might get better.
3. New building nationally wasn't keeping pace pre covid, but it was by a negligible amount. Post covid, new building is years behind where it needs to be.
4. High interest rates now has effectively got people stuck in existing homes, because a new mortgage would be double the payment.
5. Inflation happened, 20% of the increase since 2020 is just inflation.
6. Short term rentals have devasted the residential market in popular tourist areas, forcing them to charge hotel taxes and follow those regulations is hopefully going to start correcting this.

AirBnBs are one reason. My wife’s home town is trying to pass a law regarding short term rentals because close to half of the houses in town are airbnbs. A developer started to build a new housing development specifically to be bnbs.

Another reason is corporations are buying property as investments.

Land is the only commodity that's actual worth anything, perpetually.

I stayed at an Airbnb ...

That's why.

The biggest reason that is often overlooked is wealth inequality. The rich keep accumulating wealth, and real estate is a scarce form of wealth that holds value, produces a return, and can be accumulated. It probably accelerated recently because of the large amount of money that was dumped into the system around covid; that was yet another opportunity for the wealthy to grab a bigger share of the pie.

If things keep going this way, we're going to get into a situation where regular people don't own houses anymore, and rent is a much larger percentage of your income.

Investors.

China's entire modern "economic miracle" is founded on housing as an investment vehicle.

You can in part blame Canadian Conservatives in BC, specifically Bill Vanderzam, Christy Clark, Gordon Campbell and Kevin Falcon; as well as federally, Brian Mulroney and Stephen Harper, for importing this behaviour and concept from Asia and its rise here. Initially in the late 1980s and early 1990s it was about attracting the elite of Hong Kong, who were afraid of what the handover of Hong Kong to the CCP would mean. (And rightly so, as it turns out.)

Vancouver BC is infamously unaffordable, and its entirely because of investors, both national and international using its real estate as a ridiculously effective investment vehicle. If you had purchased a home in the suburbs for 500k in 2006, that home would be worth well over 2 to even 3 million dollars today.

When Vancouver started capping out and hitting limits investors moved on to apply the same practices all over the continent.

I get roasted for this every time I mention it because I think people on sites like this generally fit in this category and feel personally attacked, but I honestly believe a large part of it is from WFH becoming more widespread during COVID. People were able to leave the large cities where their jobs were all located and could move wherever they wanted to so that competition for housing drives prices way way up. The few friends I do have all work in software development and all moved during COVID away from their offices and into houses. They all had a similar story "the realtor told me any house that's on the market for more than 5 days (that's crazy crazy short) has a major issue, stay away from those."

Tie that into the expansion of investment companies buying houses with the intent of renting them forever and the NIMBYism that keeps new construction from being made because "My PrOpErTy VaLuE!" and it's just a recipe for disaster...

I hate that I'm going to be stuck renting someone's garage or basement and paying their mortgage in rent prices for the rest of my life...

The commercial real estate market has taken a big hit since COVID and RTO is generally unpopular. In North America this has led to a shift to buying residential housing for rental or resale.

I remember back before 2020 there was tons of mountain and cabins and homes and stuff like that anywhere from 2:50 to 500K. Now you won’t find a single one less than 800k…

WFH and good satellite internet were a bit of a game changer here. You could now live in a remote place and work a job with a high income.

Regular homes are just as bad. I’m seeing homes in my area that sold for around $200 to 300K in 2019, now they are 500k and above.

Supply and demand here. There aren't enough houses being build for people (and private investors) that want to buy them. The price rises.

I don’t understand how this makes any sense? Salaries were not doubled, but somehow the price of all homes are now twice as much.

Lots to unpack with this one. First, some people's salaries were doubled. There has been some niche sectors of industry that have seen large year over year increases in income, specifically some STEM fields. Second, housing price rises are not linear across all pricepoints. The cheaper house are going up significantly faster than more expensive homes. Why? Because there are more people shopping at the lower pricepoints. When we bought our new-to-us house a few years ago buying a house $150k more expensive than the house were were living in got us very little more house. However, buying a house $250k more expensive got a lot more house (larger, better neighborhood, more outside space, etc).

The answer is always speculation investment. People are on average richer and real estate is the only trully limited economic resource as we have limited land especially in desired locations.

Seriously lookup how much of real estate is uninhabitable.

People are richer, the tech is better and everything we know about economy would indicate that real estate should be more accessible but that's not the case because the market is manipulated.

The best part? If you invest in a stock index you'll almost always out do real estate ownership almost anywhere in developed world. So people are hustling this stupid game while they could just sit back and watch money do money things.

I stayed at an Airbnb

Nothing funnier than source of the problem complaining about the problem :D

It varies by region and country but the big underlying factor is not enough new homes are being built. It's creating an artificial scarcity which is driving up prices. Some other factors come into play depending on where you live. For example, I've read in America that a lot of the homes are being bought by trust funds and big corporations that can just overbid everyone. Now there are even less viable homes to sell. Here in Canada, we have a big problem where our federal government brought in a large amount of immigrants for its Temporary Foreign Worker program and its foreign student programs which created a big spike in population, especially in the major cities. The local governments are responsible for house building and didn't do anything about accommodating a bigger population despite them knowing it was coming.

My guess is that as the need for housing has increased (population growth, short term rentals taking up supply, etc), we haven't been building the right kind of homes to fill the void.

Nobody is out there using land to build "starter homes". It's either large, expensive houses or apartment complexes, so the demand for home ownership is high, but the ones available to buy aren't cheap.

It would be like if nobody made affordable cars, so most drivers were stuck either leasing or saving up for a Lamborghini. (Hyperbole, but you get the idea)

Housing shortage - not building enough homes. More people. Costs to build rising.

mixture of housing supply shortage, empty homes, fucked investments, a bit of zoning laws, and nimbyism, and airbnb

housing supply shortage

younger generations want to live in cities because thats where both employment and "fun" is reletively speaking. the demand is very high for limited space.

empty homes

in some areas, there are homes that are completely empty, some due to negligence, inheritance and some just to artificially decrease supply. to put an example, San Jose, CA legitimately has more empty homes than it does homeless.

fucked investments/nimbyism

some people see housing as an investment instead of putting it into stocks. the investments keeps proces high because its seen as profit rather than a basic necessity to live. people who own houses will use all their power to prevent more houses to be built because more home lowers procing because of more supply.

zoning laws

some places, they restrict building to strictly residential or strictly commercial building. as WFH becomes more mainstream more land needs to be made as residential land. or remove the zoning alltogether

airbnb

airbnb gets you more money in popular areas. it takes away a potenial home for a local worker in favor for maximum investments, which is bad for the city, because it circumvents hotel taxes, and takes away potential income tax from someone who would have lived and worked in the area.

In my area:

1. My area is a relatively Low cost of living area surrounded by people that have money. When they want to work remote but still stay in the same state, some % come east for cheap housing. They can pay cash for houses.
2. Corporations are buying houses, then renting. Less houses on the market. They also pay cash for houses.
3. People with multiple houses can use the aforementioned houses to buy up more housing to rent, creating a investment loop. Its in their best interest to keep the houses as small businesses/revenue streams.
4. There are apps that hook into MLS (example: https://www.mlslistings.com/more/mobile-app/) which means investors can make an offer faster than the general public or set up alerts (think stock market) that hook into the API. Ever wonder why some houses get multiple offers before or right after they are listed? This only works if the company/entity selling the property decides to add in the info into MLS and not just go with the defaults.
5. More people are alive today than yesterday. They need housing. There are less houses getting built, or being built for owning. For renting: https://www.youtube.com/watch?v=mrxZqPVFTag

Source: Used to work for a company that did this sort of buy/selling of properties.

I feel the main reason is corporate entry into the market. Foreign and domestic. The ROI is larger on real estate than any other investment.

The answer is very location dependent, and often multifaceted. However here in Canada it’s a combination of neglecting affordable housing construction for decades, a huge uptick in immigration raising demand in some areas, a total lack of political willpower (most of our MPs report housing income, many actual landlords), and an economy that’s over-leveraged on real estate in general.

Prices are falling in Florida, and inventory is stacking up.

Think of inflation from monetary policy like lead in the environment. It takes time, but it all eventually ends up in the bones. Real property are those bones. 13 trillion dollars were 'created' during covid. Inflation (which i don't think is necessarily the right word to use, because it implies it can go backwards), takes time to get "into" the price of products, but products that transact faster, inflate faster. Property "inflates" on a relatively long time horizon, but its often very substantial appearing jumps because the transaction cycle is so long (typically 10+ years between transactions).

So maybe you've not bought a home, but try not to think about things in the absolute value of their price-tag, but rather in the monthly cost of the money to make the payments on the debt. At 2.5% interest, lots of people can afford a 500k house. At 6% interest far fewer can. If the seller re-financed at less than inflation, its literally more "profitable" to just pay the mortgage than to sell.

I see some others blaming air-bnb's. There is very little evidence for this. A few papers have found significant correlations, but the effect is so small relative to inflation that we should probably ignore it, and most of these papers are from a pre-inflationary period. Orders of magnitude more impactful is the fact that so many home owners were able to either purchase or re-finance at an extremely low rate in 2020/2021. Blaming Air-bnb's and ignoring the broader macro-environment in which all property sit is just extraordinarily lazy, reactionary thinking. Air-bnb's represent a microscopic number of actual rentals, and have been dropping in numbers for years.

The market saw an unexpected dip post pandemic as a result of higher and higher interest rates as fiscal authorities mingled with threats of inflation.

Now that the interest rates are falling, prices are rising so that the monthly payments on loans and mortgages stay roughly the same, because it is the actual determining factor of if a property will sell.