Secondly- What would it take for prices to change?
In: Economics
One thing not being mentioned in other responses… yes, it is due to more people wanting to live in cities, but another factor at play since the early 2010s is a massive increase in corporate owned houses that are strictly for rent/Airbnbs. After the housing crash in 2008, there was a surplus of low cost residential real estate. Corporations figured out they could come scoop them up and these houses would be appreciating assets. But then sites like Airbnb and Vrbo became massively popular as well, so buying deflated residential real estate in urban areas not only provided them appreciating assets, it also provided a revenue stream that would make money, whilst holding this appreciating asset.
Before the housing crash in 2008, less than 10% of single family homes were owned by corporations. In 2023, that number was closer to 40% (as low as 30% to as high as 45% depending on which sources you believe) of single family homes were bought by corporations. Even if you believe that number is closer to the low 30s, that still means 1 in 5 houses that weren’t owned by corporations in 2008 are now, effectively removing 20% of houses from the market.
And for the average person looking to buy a new home in an urban area, it’s hard to compete with a corporation if they are interested in buying in that same area. While you are going to be getting a mortgage and negotiating on price, the corporation can easily pay over asking price in cash, knowing they will get the revenue stream from it and that the value will almost certainly go up.
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