As someone else pointed out, people from all over the world, not just people who want to live there, can buy a house. That means a LOT of people can afford them

As someone else pointed out, people from all over the world, not just people who want to live there, can buy a house. That means a LOT of people can afford them even if they were a few times more expensive. Still, the majority of homes are still either bought by people who plan to live in them, or by landlords who will rent them to people who will, so obviously some people can afford them. Turns out, doctors, a subset of lawyers, various other high end professions including, yes, software engineers, make a lot of money, and there's quite a few of them. Add couples and families and you don't need everyone in the home to be able to afford it, either. Roommates can split the bills. DINKs end up with much more disposable income that can seem astronomical to more traditional families. Older people may have been able to accumulate wealth that seem impossible to 20something or even 30something years old. You can add a lot to that list of examples. Even when you take away all of the outliers (like rich Chinese investors), turns out a shitload of people can afford these places (which is why if you want to use supply to reduce prices, you need to build a LOT before it goes down enough to reach the lower and lower middle class). Also consider that 50% of your income (in an investment, no less!) when you have a family income of 250k isn't the same as when you have 50k. I'm fairly privileged, and if I gave up 50% of my income to housing (with a large portion really being a stored investment), it would still make a ton of sense financially. For sure it shouldn't be that way: even if you were a rich selfish bastard, its easy to see how the people you're displacing are going to come back and be a pain in your butt (see San Francisco), so it's in everyone's interests (not just for social justice) to fix this problem. Still, it's this expensive because it's still worth it and there's still a ton of people who can afford it. It really dawned on me when I last looked at the status of my mortgage and my savings. When I bought my place less than decade ago (so not as expensive as the market is today, but still when the market was red hot as the interests were at an all time low), it was a non-trivial percentage of my income, the downpayment was most of my savings, and we were definitely running the numbers to see what would happen if my wife or myself lost our jobs. It was tight. A few promotions, job changes, and favorable economic conditions later and I could almost pay cash if it was still at the same price it was back then. Early 30s me thought it was an insane amount of money, but 40something me wouldn't have much issue with it. That's the kind of economic reality and competition we're dealing with here.