As with most shortages the issues are related to supply and demand of (desirable) housing: Supply side: * Zoning restrictions. Many cities are slow to up-zone

As with most shortages the issues are related to supply and demand of (desirable) housing: Supply side: * Zoning restrictions. Many cities are slow to up-zone because their voters enjoy the high prices (nimbyism). * Lack of, or insufficient infrastructure limiting size of desirable areas. * Generally high crime rates in urban areas, due to underfunded police departments and public services, also limits size of desirable areas * Poor education opportunities also contributes to the limited amount of desirable housing, leading to extremes in home values Demand side: * US is the worlds #1 tax haven. Foreign investors buy US real estate as a means of wealth storage and speculation, which increases demand. * Mortgage interest tax deductions for homeowners are essentially a wealth transfer from taxpayers to banks and homeowners. * Artificially low interest rates greatly increase the amount of capital chasing homes. For example a $2000/mo mortgage at 4% finances $420k, but at 6% only finances $333k. (People buying homes right now should think about the implications of this). * Irrational societal obsession with homeownership. * Historical trend of price appreciation has fostered a false impression of home ownership being a good investment, despite the great risks and expenses involved.