The asset inflation that a good chunk of that profit derives from (because so much of real estate vitally depends upon transaction churn) is in the dirt, not th

The asset inflation that a good chunk of that profit derives from (because so much of real estate vitally depends upon transaction churn) is in the dirt, not the structures on top. Verify this for yourself by looking at fire insurance: it hasn't nearly increased coverage amounts by the same growth as real estate in general. Any taxpayer-based bond issuance for infrastructure of water, wastewater, roads, electrical, data, and emergency services is a giant externality that developers pay only a tiny fraction of by comparison, and the developers capture a big bite of the profit up-front on the initial sale. Taxpayers end up footing the risk cost of anticipating the network effects of the build out will pay off the projects. This is compounded by the car-centric American culture imposing infrastructure costs that go up as the square of the expansion, but by and large cost recovery and operational costs are comparatively linearly composed because American suburban and exurban developers tend to sell low-density in the first pass greenfield development (large lots, fewer people per acre) to sell their book and cash out fast. NIMBY politics then gridlock densification later, so you get all this infrastructure that is now spread among fewer taxpayers than you need to effectively not only pay it back, but properly maintain it as well. The real estate industry enjoys enormous subsidies that really distort the market, and if you aren't in the industry this basically translates as monotonically increasing land prices (which most people interpret as constantly-increasing housing prices). Much of the dysfunction is likely to entrench and get much worse in the future, and won't stop until a really ugly, sharp dislocation happens.