Housing markets like this are bad for people and bad for the economy. It is bleak. There is no actual value being created when home prices skyrocket; it means that supply is severely restricted, and it prevents efficient location of people near their jobs.
It also destroys disposable income and savings potential, thus reducing overall quality-of-life.
However, there is a bit of a problem problem when people like, say, teachers, police officers, firefighters and can't afford to live anywhere near an entire big urban area which needs them. Rich people depend on non-rich people to do things like stock groceries on store shelves, teach their kids, police the streets (protecting all those riches), put out the fires (protecting all those riches) etc.