Personally, I believe these strong sentiments and beliefs that the market can only go up needs to be reversed before we will see any material change.
This ignores massive push for people moving due to work, so in better places there is exponentially more interested people than space available. Just look at SF or NY is we talk about US.
Plus add strong emotions, most world population simply wants to live in their own, renting is frowned upon, despite ie Switzerland having very low home ownership, population is one of happiest globally and nobody here bats an eye, there are more important matters in our short lives to focus on than gathering as many available resources in some rat races.
(also, I personally am speaking from an EU perspective, where my expressed opinion is the same).
But tell me: are you arguing that we see a general willingness to spend a larger roprtion of disposable income on housing, and that this is a permanent trend (due to the dynamics you emphasize).
What a am considering is whether people are ready to move that to half? Two thirds?
My own assumption is that people are willing to do this as long as they believe that the house will be a good investment. But houses can never be a long term good investment. It will always converge to inflation.
Tokyo would like to say hello. IIRC, it’s the only place in Japan with a net population growth, largely due to people moving in for work.
The situation is dire elsewhere because many people are taking completely absurd and/or selfish stances on development in their locale.
Not to mention how many people now only want to work from home, making it pointless to live in a big city with HCOL.
People have trouble to understand that shit can't go up forever...
I don't think most people choose a place to live strictly based on the location of their employer. They enjoy being in a city for its food, entertainment, and accessibility.
Good cities have limited space so I expect the demand will only increase over time, until the population tanks.
When they paid $2M for a house in SF 2021, and their whole family is laid-off and nobody is hiring as the economy is going down the drain... good luck on believing that your house that costed maximum 300K to build will still be worth 50% than what it was...
I see houses bought in 2006 and sold in 2015 with a loss (in capital cities).
The thing is, if you entered the housing market in 2006 you would be set significantly back. If you entered in 2009 you would be at advantage.
People are betting on which of these cases we are in now.
Anyhow, when people think you are nut for buying, it is probably the right time. Currently the FOMO is real and everybody are recommending me to buy. I take that as an indication of over optimism, which is factored into the price.
Very, very few US homeowners are betting on profiting from home price changes within 10 years.
They are betting on reducing monthly shelter cost volatility, and the freedom to modify their home, by purchasing a home with a very long fixed rate mortgage and maybe selling after a couple decades.
That is certainly one of the cool things about entering the housing market: Now you are a monetary instrument.
People will tell different stories about them entering into the housing market based on them entering in 2006 and 2009.
Someone loosing 15% equity on a geared investment over 10 years are probably not going to say "buying a house was by far the best decision I ever made in my life".
That's plainly not true where I'm from.
When you buy real estate you're mostly paying for the value of the land. Sometimes I'd even say the land might be worth more if there wasn't already a house on it lol.
Also in a lot of places in the world is like this.
I'll suggest neither of us are actually right anyway. A raw piece of land that was never setup for building a house on would definitely be worth less than a piece of land that was ready for a house. Especially if it had city water/sewage, power lines, fiber for internet, etc. Add in school districts and whatever else, and again the land becomes more valuable. So having a piece of land with a house on it might be worth more than an empty piece of land - but that comes back to location! A piece of land in the middle of a developed city would be worth more than a random piece of land in rural Ohio.
Anyway, I still think it tracks. In my town an empty house-sized plot of land with utilities would probably cost similar to a house (maybe minus that $300k cost to build a house).
But the value of the land is also not given.