Similarly, why aren't houses just a thing that costs a bit more than the bricks and labor required to make them?
Similarly, why aren't houses just a thing that costs a bit more than the bricks and labor required to make them?
Because words like "housing" and "houses" in conversational speech hides the fact that it has 2 major components: (1) land and (2) the building structure
The big part of rising housing prices or "scarce housing" or "demand exceeding supply" is really about desirable geographic locations.
Sure, raw materials prices like lumber and copper pipes go up in price too but it's also the rising land value that's contributing to the "return on investment". That's the component price that doesn't work like food commodities. My home is decades old and has outdated technology that today's brand new homes have upgraded but nevertheless, my so-called "house" has tripled in value because a new hospital down the street was built 10 years ago and all the doctors want to live in my neighborhood to have a short 10-minute commute. If someone actually bought my so-called "house", they may bulldoze it and rebuild a new more modern home on it.
Only to a point. Many desirable geographic locations have a lot of local factors that prevent additional housing from being built with the intent of housing more people (think homeowners defending their "property values", zoning laws, etc). Similarly, homes being "investments" means there's a self-perpetuating cycle; builders build luxury homes instead of multi-tenant buildings, because they know that's what companies want to buy (being flipped the easiest with the highest rate of return), so even when there is new land being developed, market forces push it to being an "investment" rather than housing people. Income inequality furthers this; why use the land and sell a modest home to a worker, when you could use the home and sell a luxury home at a much larger markup to the rich?
It's like a sink that eats up economic gains.