This is a symptom of the disease, not the cause. I can't speak to other places but in SF the disease is ridiculous zoning. City doesn't allow dense/tall buildi

This is a symptom of the disease, not the cause. I can't speak to other places but in SF the disease is ridiculous zoning. City doesn't allow dense/tall buildings despite plenty of developers would be happy to build them because there is demand for it. It also happens to be an attractive place to be so every year we have more people coming in than new apartments being built so rent and cost of houses raises every year faster than in other places. If you were a rational investor, would you rather buy a house in SF, where the price will raise faster than S&P 500 or in Kentucky, where it'll remain the same? Rational investing strategies make housing even less available, prices going up even faster, creating a vicious circle. Note, however, that the only way to get out of this is to allow construction keep pace with population growth, as it mostly happened in Seattle in the past 5-10 years. If house prices will not rise then people will not be using them as investments. Free market is capable of sorting this out. It didn't happen because the market isn't free because the government of the city of San Francisco doesn't allow it to be by responding to one of the highest population growths in the nation with one of the most restrictive zoning in the nation and trying to "fix" the problem with rent control. You don't have to be a Nobel-winning economist to see how that leads to disaster but if it makes a difference, Noble-winning economists agree that restrictive zoning and rent control inevitably leads to disaster.