We're overvaluing SQFT, and way undervaluing land. A 1100sqft condo with no land in a city, should be much cheaper than a 2200sqft stand alone McMansion on a quarter acre of private land. But today, the opposite is true.
That's going to end up being a long term mistake. And because of the housing cost distortion, we're incentivizing people to continue that mistake.
This is exactly it!
We are seeing a ton of individuals who are not wealthy, even if they have a strong income. They are buying into the idea of paying these crazy rent prices to stay "connected" or in the "heart" of the urban areas. Access to these things is not granted by housing, you can attend every fancy nightclub, restaurant and bar while living 15min away in a drastically larger/cheaper living arrangement.
On the surface, a 1000 sqft condo in the city and a 2000 sqft house are comparable products. But they're not, they are marketed to completely different kinds of people whose selection criteria are not comparable in the least.