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.

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.

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

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.

I stayed at an Airbnb …

That’s why.

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

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.

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.

Because houses past your primary residence are not taxed enough. Houses you own should be taxed at an exponential rate. Primary residence means you live there >80pct of the year.

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).

Crime.

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)

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.

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.

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