As soon as people get a mortgage, they're invested in house prices rising.

Mostly they are just invested in inflation, the same way anyone with high debt of any kind is. From 1970-date inflation alone is responsible for a $120k house becoming a $700k house.

The fall in adjusted incomes is the real issue that everyone is overlooking.

An overall positive slope but the last decade has not been kind to the bottom 60%: http://www.advisorperspectives.com/dshort/charts/census/hous...

Nah. Unless you take out equity in your house, rising house prices mostly mean higher property taxes.

Now, inflation on the other hand, they now have a vested interest in, as it makes the loan easier to repay.

This all goes out the window if you're buying a new house every 3 years, of course.

In California, property taxes are assessed only when the property is sold. So people have an interest in seeing their "investment" become more valuable. Their taxes are the same either way.

What!?

In Canada, property taxes are assessed as a fraction that results in the city budget being met within constraints. Rising house prices for YOU vs. everyone else would result in higher property taxes, but a rising tide lifts all boats. The city budget and the relative worth of your home to your neighbors' determines your fraction.

It's more that the people who own houses in a city get votes as to whether the price of their investment should go up but the people who would like to move there don't get a vote.

But really in the Boston area it seems like a bigger force (talking with some co-workers) is not wanting poor people to move into their school districts for various reasons. If it were just prices there'd be a contingent who would want to be able to sell their plots to developers for even more than they could resell it for as is.