High immigration + no construction -> High demand + low supply. Then on top of that you have record inflation with stagnant wages.
The market is being completely rational. What "overvalued" here means is "are homes expensive compared to local wages" not "are homes irrationally expensive." Normally this would drive construction but the market is distorted by credit such that new construction is less economical (a result of 2008.)
This also forms a feedback loop: people are giving up on labor since housing consumes more than they make, driving up the price of construction, driving up the price of housing. It's likely the dollar will crash before middle/lower class hosing will.
People keep repeating these statements about underbuilding or lack of supply as if they're backed by data, but it's just he said she said. Number of housing units to households is the same as it was in the year 2000, and in line with historical levels.
Home price gains were driven by a low rate induced speculative frenzy. It's inflationary psychology at work. E.g. people spin narratives about why you need to buy now to avoid being priced out, thus everybody starts to panic buy making the prophecy self fulfilling in the end.
But this never ends well. At the root of every bubble is some collective narrative that "justifies" its existence
High construction in Idaho does nothing for housing in New York. National construction rate averages are pointless. Gotta break it down by geography and locations of (in-person) jobs.
Housing is fungible in a remote work world. So construction in cheaper locales can help reduce costs in HCOL areas. E.g. people migrate from CA to FL, reduces number of households in CA. Not for local jobs of course
But anyway, beyond fungibility, demographic trend is towards population decline. Spread between population growth and rate of new home construction is at an all time high.
And even CA recently passed a law allowing densification on certain SFH plots
As long as going to the same bar as your boss during happy hour leads to a promotion, career progression + economic opportunity will be tied to geography. Barely any companies operate like Gitlab does.
Demographic decline is a much bigger problem to solve, not something that should stop us from taking action.
US immigration is cratering, it's a national crisis nobody cares about.
The supply constraint is old but its not why housing is high - housing prices are high even in places where there is a lot of construction. Monetary policy explains it a lot better, and it predicts that at some point the trend will reverse.
It's not exactly all about supply and I talked about that in my original comment but maybe that needs clarification. Yes the prices are high because supply is limited, normally that would drive construction but because the prices are so extremely high and interest rates so low almost everyone has to buy housing with credit. One of the many problems with this is that lenders get to be picky about what exactly people are allowed to buy and one of the things they don't like is people financing new construction. The result is people who could otherwise afford to construct new housing (and construct it in more efficient ways) for themselves in less populated places being forced to compete for the already short supply.
Perhaps legal immigration is but immigration overall is very high.
I've hit my quota, here's my reply: illegal immigrants still have to live somewhere So they're going to take housing off the market. They manage to rent houses in various ways (employers, government programs, ngos etc.)
I'm places like California, illegal immigrants can get state issued drivers license and open bank accounts, and that ignores the simplicity of renting or owning a house in another's name
The market is being completely rational. What "overvalued" here means is "are homes expensive compared to local wages" not "are homes irrationally expensive." Normally this would drive construction but the market is distorted by credit such that new construction is less economical (a result of 2008.)
This also forms a feedback loop: people are giving up on labor since housing consumes more than they make, driving up the price of construction, driving up the price of housing. It's likely the dollar will crash before middle/lower class hosing will.