"I ... wonder how there are so many people making so much more money than I do." I've thought about this a great deal, and there are at least four responses:

"I ... wonder how there are so many people making so much more money than I do." I've thought about this a great deal, and there are at least four responses: 1.) As pointed out by others, I suspect a majority of households living in these expensive areas could not actually afford to 'rebuy' their house on the basis of current income. 2.) As a corollary, the prices you are seeing are only paid by marginal actors who happen to have the income or savings needed to get a mortgage. Thus only a minority of people living in the expensive area can actually 'afford' it. 3.) Lots of people are willing to commit to paying 50% or more of their gross income to a mortgage. They win (at the margin) and drive up housing prices. 4.) The money lent for residential housing is 'backed' by the government, which essentially means it is printed (not in the sense that it is printed at origination time, but it is instead printed when then entire housing market goes south and the Fed needs to bail out the Treasury/GSEs.). I would note that printing a dollar is the same as thieving a dollar from the sum of all dollars held. So in conclusion, the reason housing is expensive is because people are willing to take risks with other people's money. If you aren't that kind of person, you probably don't belong in one of these expensive housing markets.