Housing is too expensive because it is an investment, full stop.
I live in Tokyo, famed for its "housing affordability".
Guess what, it's completely unaffordable for normal people now, because of people purchasing homes for investment purposes. Rent is still affordable but has a rapid upward trend as well.
I do always find it funny when people online bring up Japan as the leader of keeping housing affordable. Pretty sure the average income to house price ratio in Tokyo is much worse than it is in major US cities. (If I'm wrong on that data someone correct me, I'm basing it off of mental math of house prices I saw on a sign and salaries friends told me).
I think it was true for a long time, and home prices were a good deal. There is also a fair bit of distortion due to near zero interest rates, where banks are willing to loan higher multiples here with 0 down payment.
But house prices have exploded upwards since covid, and wages have not.
So it's an extremely similar situation to everywhere else in the world. And the underlying reason is the same: people buying because they think real estate will go up in value.
By the way, as a fun fact, the most common mortgage in Japan is a ARM. Last I checked, 70-80% of mortgages in Japan are variable rate. The BoJ is currently on a path of adjusting rates upwards. So we will see how this all shakes out. If a situation like the GFC happens, it will not be pretty.
This is very imprecise data that I have, but my understanding is that pre-covid Tokyo was around 8M yen median household income, and a median home was around 60M yen, so roughly 7-8x the median HHI. Now it's around 80M for a new home and wages are the same.
Seattle even right now is ~110k ish HHI, median home price is ~$800k, so that's 7-8x, before COVID I think it was around ~650k, so around 6x. Also Seattle is known for being pretty expensive, a lot of cities like Houston have an even better multiplier.
It just doesn't seem that different to me. Feels like a lot of people are unhappy with property prices and think it's uniquely a US problem, whereas the system in the US actually works decently well compared to a lot of places. (It would take many essays for me to list all the flaws, I'm not saying it's perfect I'm just looking at it relatively speaking).
I live in Tokyo, famed for its "housing affordability".
Guess what, it's completely unaffordable for normal people now, because of people purchasing homes for investment purposes. Rent is still affordable but has a rapid upward trend as well.