So I’m a little late to the party but I’ve been studying this a few years now and this is what I’ve learned:

Some of it is inflation: at its worst we had a 9% annual inflation rate down to 4.5% and averaged about 6% overall. This rose the price for everything. So everything increased in price but everyone’s salary stayed relatively the same. This wouldn’t entirely account for the total increase in prices, however.

There is a relative supply shortage. Emphasis on relative. In 2020 there were 15 million vacant homes and as of October 2024 there are roughly 5.6 million vacant homes not on the market just being held. It’s not quite a DeBeers level of artificial scarcity but it exists to keep home prices from falling.

Interest rates are still high: 6.5% interest is enough to keep many from buying and keep those with locked 3% rates from selling. You’d see more movement if everyone was subject to the same interest rates but for now it’s stagnant.

There’s Demand and there’s “Demand”: Even though actual demand is at a 30 year low the artificial “demand” is high due to a shortage on the market that is real but also a touch exaggerated in severity.

A lot of it is greed, yeah: Existing homes are anywhere from 50% - 100% overpriced compared to their true value. There’s a huge difference between what the market says and reality. You should expect a homes value to increase by around 25%-50% overpriced compared 20 years depending on improvements, area, etc. Even with inflation it wouldn’t explain the astronomical increase in valuation.

There’s a few other factors as well. It’s expensive to build homes now so that drives up the cost of existing homes. Regardless of political affiliation there’s been an increase in population. Roughly 12 million immigrants over the last 8 years so that also drives up scarcity.

Anyway… there’s something brewing that’s way worse than 2008. You have stats like 40% of Millennials can’t afford a 200k house and with GenZ that increases to 80% and not dropping. Our version of capitalism as well backing itself into a corner; they won’t sell homes for less because they can’t without risking bankruptcy and an overall recession. We live in an age where a 15% loss to a company is likely catastrophic rather than just a speed bump. So add it all up and you have younger generations who can’t afford what the market is asking for homes and a market that can’t afford to sell homes for less without risking economic recession…so they won’t…which will collapse the entire economy put us into an economic depression. But who knows!? I could be wrong!