What confuses me is that low unemployment obviously doesn't lead to real wage increases (currently).

There seems to be something wrong either with the unemployment stats or something else is not quite right.

As long as the money that is confined in housing assets doesn't reach the "lower" market of people who actually need to spend that money, it's perfectly logical to me that it doesn't appear as price inflation in the general economy.

I suspect that's because the nature of "not-unemployed" is changing. Long ago it usually meant either being out of the workforce (retired, student, homemaker) or a full-time job with benefits.

Nowadays we're seeing a decrease in the last category, and an increase in "underemployment" and people holding multiple low-quality jobs to make ends meet. They aren't "unemployed", but they're not in a strong negotiating position either.

You can only "afford" so much house until your wages increase or your equity affords a refinance/sale... unless you can generate side income some way.

I am not actually positive on wages increasing. I feel like there is enough information asymmetry in the market that wages will stay depressed.