If housing is so inflated in value right now, wouldn't investors be pouring tons of capital into construction?
If the cost to build is fixed but the sell price is continually increasing, then isn't that the greatest profit making opportunity you could ask for?
So then why isn't the supply side of the market catching up with the increases?
To house more people, you need to build denser housing on the fixed supply of land. Most places have zoning laws that limit density. But beyond that, it's actually less expensive to build higher cost homes - a lot of small apartments require a lot of walls (more material) redundant plumbing and electrical (more labor) and you need to handle the sale or rental to more parties (more overhead). If they do build apartments, it's going to be samll 1 and 2 bedroom apartments because those are lower risk - you'll always find some young people who need a place and can get a parent to cosign a lease and who will let their landlords treat them like crap. 3 or 4 bedroom apartments appropriate for families are harder to move, so even though those tenants might be able to pay proportionally higher, the opportunity cost of vacancies makes them a non-starter.
For another zoning restrictions are severe in the US, with most residential land zoned for single family housing with large lot sizes.
With high upfront costs, limited land, and political issues, developers would rather build high end housing, which has led to over supply in the high end market, and under supply in the low end market
A lot of good can be done if we reset California zoning ordinances to what used to be allowed, just as a start.
Construction materials companies (e.g. lumber producers) would rather just raise prices than scale up production dramatically since there's a real risk of demand drying up when interest rates go up sometime after 2024. Same reason why crazy COVID demand for masks has not lead to huge increases in domestic mask manufacturing from small players.
In my area the issue was land to build on. The main undeveloped areas are either national forest or farmland the majority of which is owned by just a couple families who are not in a hurry to sell it off.