I think that's mostly true, but there's some other factors that are pretty significant:

- Down payments are pretty hard to come up with on a $1m property

- A lot of the time you're competing with developers willing to pay cash

Both of these things are very true here in DC's housing market, and I've heard similar things from friends in other more-or-less-urban/near-suburban places.

> Down payments are pretty hard to come up with on a $1m property

I agree, it does create some kind of ceiling.

> A lot of the time you're competing with developers willing to pay cash

I think that's a secondary effect. Low interest rates create a market of people willing to buy at high prices that the developer is hoping to resell to. A lot of their working capital is also borrowed.

> I think that's a secondary effect. Low interest rates create a market of people willing to buy at high prices that the developer is hoping to resell to. A lot of their working capital is also borrowed.

Oh yep, I totally buy this.

> Purchasing decisions are made based on the monthly payment.

Yep, this made the decision for me. Do I pay 30% more rent to move into a basement? Or 50% more mortgage for a full, freehold house outside of the city?

I like living in this urban area, but a hybrid commute from a small town with the bare amenities is not bad either if it gets me a house.

Trying to get a house built is brutal right now. That surely is high paying remodel jobs driven by interest rates, but many many tradesmen have told me they have no one to work with and no one to hire. A lot of these guys are aging out.

The interest rates certainly factor into high home prices, but really it just comes down to supply and demand. We haven't been building enough houses, especially where people want to live.

Definitely, but I think that's because of the lack of tradespeople and the barriers involved in building new houses. It's hard to build multi-unit-dwellings in cities now, so if you ever get an opportunity you're building a luxury megaplex to squeeze the max profit out of it. And sure you can look further out, but then you're looking at school district problems, lack of public transit, lack of amenities like grocery stores, restaurants, theaters, shops, culture centers.

I think a lot of this probably boils down to our insistence that cars be huge parts of our lives? It's really incompatible with the 15-minute city just because of the space requirements (parking at destinations, parking at homes, street width), and let's not forget maintenance costs and noise/pollution externalities. But I guess in the face of no public transit, what are we supposed to do?

I live in flyover country, and good tradespeople have all the work they want. They're turning down jobs that aren't highly profitable/easy.

Definitely, why bust your ass to drive far out of town or build an irritating thing when you don't have to?

I... maybe think the same thing about the tradespeople shortage as I do about the nursing/teaching shortage? We super need them, wages are going up, but supply isn't, which breaks the law of supply and demand (more or less). I think the cause here is a culture one, like there's not a lot of prestige or money in this blue/pink collar kind of work (generally, not always), so people (millennials) went into white collar professions instead, so we have a glut of people with bachelor's degrees and college debt, and a shortage of people with trades credentials. I'm handwaving a lot, but it seems intuitively true to me.

At least where I live, there's no stigma to being a contractor or builder. Most of them make very good money, and while they might not know the difference between Gouda and Gruyere, they're not dumb hicks.

I do think that it's a tough field to keep "staffed up" since it can wear people out pretty quickly, so it needs a constant influx of newcomers.

Oh yeah actually I remember when I was in high school one of my friends' parents were contractors and they'd build their own beautiful house and landscaped it amazingly. Turns out they were also pretty well off. Definitely popped my bubble about construction.

I think you're probably right about attrition, also the work can be hard on people. But also I think I read somewhere there just aren't a lot of people going into the field. Something about parents encouraging their kids to go to college and become white collar professionals instead of blue collar laborers. That rang true to me too.

Consider that a speculative bubble can create excessive demand.

Ireland had a shortage of housing until the GFC, when suddenly they didn't. I'm expecting NZ to discover the same over the next year or so.

I really think it's as simple as banks lending excessively for non-productive purposes.