For one party to see returns exceeding interest, another party has to pay for that (exponential) rate of return. It's unaffordable for the second party.
These prices compound, exponentially, and as a result younger generations spend much more of their money in wealth transfers to older landowners. It's unsustainable unless the wages of younger generations also start to rise at similar rates, which isn't happening.
This is just factually untrue. House prices do not grow exponentially. The rate at which they grow goes up and down, but it’s never been exponential. The entire premise of your argument is indisputably incorrect.
If you used $1,000,000 to buy $20,000,000 worth of property in San Francisco, and you wanted to get a 15% annual return to beat the market, the numbers would look like this:
You’d be paying around $600,000 in interest, say you’ve got another $100,000 in expenses, and you want to get $150,000 for your return. That’s $850,000 that needs to come from somewhere, in San Francisco I think the rent to price ratio is about 1:50, so that’s $400,000 in rent, and the remaining $450,000 needs to come from house prices increasing. So to beat the market your property assets needs to appreciate by 2.25%, or about what the fed targets inflation to be.
This is only possible because the mortgage is a very unique debt instrument. As far as access to cheap debt goes, it is comparable only to the highest credit corporate and sovereign bonds. The only type of debt that a regular consumer has access to, that is somewhat comparable, are subsides student loans.
Real estate is the only asset class where this isn’t true. The existence of the mortgage, which is one of the most unique debt instruments available to the general public, means that house price inflation only needs to exceed interest rates about about 0.6% to beat stock market returns.