It's a supply and demand issue at the core. There is simply more demand for housing units than available and so prices continue to rise until demand tapers off.

It's a supply and demand issue at the core. There is simply more demand for housing units than available and so prices continue to rise until demand tapers off. Using New York City as an example there are about 3.4 million residential housing units available and a population that is set to reach 9 million in the next few years (500k increase). It's true that there is not much raw land left for new development, but the city can change zoning in areas. Imagine if 100,000 1 family houses are rezoned to allow for even just 8 unit multi-family walkup. 800,000 new housing units would help counter the demand that causes the price to keep rising. The home construction industry also has issues which end raising the finished cost of housing. An interesting read is "Sweat Equity" by Larry Angell, A self-published book where the author describes why it made financial sense for him to leave his job for a year to build his own house rather than buy a house and continue working.