> House prices are going up because there aren't enough of them.

It's an interesting premise, I'd love to see more data on this. It's a very common claim but at least on a macro level there's a lot of indicators that would make me assume otherwise.

Typically if there isn't enough, you'd expect that the general trend has been that the availability per person is decreasing over time.

Availability can be measured in a few ways:

- Number of persons per home - Number of square feet per home

Ceteris paribus, if either are going respectively down and up, you'd see increasing availability and would assume decreasing scarcity.

The number of persons per home has been decreasing for 150 years, and dropped from 3.4 to 2.5 (-30%) in the past 60 years.

The number of square feet per home has more than doubled in that time. In other words, we have 30% fewer people and 100% more space. The square foot per person has increased by 270% in the past 60 years.

Of course you can still not have enough if demand has grown much faster. But instead I think there's good indications (and plenty of studies) that price increases are mostly being driven by low interest rates and a culture around seeing homes as a speculative asset instead of just a home that happens to have some of your capital locked up in it.

[0] https://fee.org/media/15199/housing1.png?width=600&height=38...

The problem with this logic is that there is literally infinite demand assuming the following premises:

1) Real-estate is a long-term positive return investment

2) The USG will do anything in it's power to keep that premise #1 valid (QE, low/negative interest rates, etc)

3) You can use real-estate equity as part of leverage to buy more real-estate.

4) Foreign investment is allowed, so the system isn't a closed loop

It's a bubble and will keep inflating until it pops.

Also, there will always be limited supply. COVID-19 and remote work changed that a little bit, but there's other reasons people want to live close to population centers: Restaurants, entertainment, shopping, schools, and friends, to name a few. Most people will always want to live not very far (but not too close!) to some group of other people.

All this is premised on a housing shortage. Without that housing shortage, there is no long-term positive return on investment.

There is not infinite demand even when housing is a guaranteed positive investment, because there's limited money and capital.

We have let people think that housing is always a positive return investment, instead of a bank account. And to do that, we have limited home building in the in-demand areas.

The actual way this is enforced is by home owners restricting development in their neighborhoods, a trend that is likely to continue.

Read the prospectus' of the private equity investments in residential housing and you'll see they are saying the same thing.

That’s what folks said in the 2000s. In fact that’s what they always say.

In the 2000s it was true too, but not nearly as acute as now.

The downturn in home building is decades long. And the 2008 cycle reduces the construction workforce even more, and it never recovered.