Homes are seen as an investment: they are being bought with the expectation that they can be sold at a later point in time at a higher price. However, this leads to some serious issues down the line.

I think it is fairly safe to say that the general expectation of an investor is that the value of a home will grow faster than inflation - why else bother investing? This means that the average inhabitant's costs for living in that home (rent, mortgage payments) must also grow faster than inflation. However, the average inhabitant's income will only grows with the inflation rate.

This means that for homes to be used as investment, the cost of living in them must be an ever-growing percentage of the inhabitant's income. And this is what we are currently seeing in practice: since 1965, home prices have increased 7.6x faster than income.[0]

This is obviously unsustainable - we can't end up with everyone spending 100% of their income on housing. The big question is, who will be holding the bag when the bubble bursts?

[0]: https://www.realestatewitch.com/house-price-to-income-ratio-...