At some point the bomb will go off, but there's no incentive to look at the long term of 10+ years out when the explosion will destroy people's political careers in the short term.
As of now, I can only count a very few who actually did it, turns out it's hard to leave where you've lived your entire working life to move somewhere you've never been, and the price differential isn't as amazing as it once was (since Covid flattened that out somewhat).
The ones who did end up doing it ended up following their children (who were priced out of where they grew up).
Normally you'd expect measured, predictable, steady inflation to be the method to "defuse the bomb" but so far that hasn't been really tried (if houses keep going up 1-2% a year, but inflation is 5%, you have a 3% drop in value each year even though on paper, you have an increase).
Housing should have been getting built like crazy in places like CA so that those people thinking of selling had a reason to sell. By not building houses property values keep booming, and even if you plan to sell and move somewhere it's easy to endlessly delay that decision when you're getting rich as hell.
And reassessing across the board is not going to happen either because it would price out grandma living on a fixed income.
https://www.boe.ca.gov/prop19/#FAQs
But more efficiently shuffling existing supply doesn't create new supply.
Most metro areas are still not keeping up with demand. Even the ones that are doing better in things like zoning (such as in TX, NC, FL) are getting enough growth from other locations that the induced demand is still outpacing supply.
We need state and federal policies that can override the local NIMBYism. CA's recent experience is both a good start but also provides a bunch of lessons learned on how these policies can fail and should be improved both in CA in other jurisdictions - especially when localities are actively trying to work around them.
* Family bought 1 house (assets), big mortgage (cause it's expensive), live until retirement
* Parents sell the house (lost the assets) to either a wealthier family or investors to downgrade
* Parents potentially share the proceeding to the kids to support their Housing endeavor but Kids will be forced to buy something smaller (usually Condos) because detached is expensive and kids wage just starting from the bottom of the paygrade.
Long-term, middle class will erode.
I love condos, but the older generations have no idea what modern condo living is really like and what maintenance is required for these kinds of places. They get talked about like 'starter' homes for young people that can't afford a single family house and so often they nudge younger people to buy them and 'get on the ladder'.
Often they are TERRIBLE investments though. Property tax is relatively high in most cities, ongoing fees are huge, governance is normally terrible, and every now and then something major goes wrong and the current owners are left with huge extra bills.
'Getting on the ladder' in this way, along with student debt really cripples so many people into a life of debt payments while building very little wealth.
This is what happened when The Rich outcompetes the middle class.
Also, when supermajority+ have the same problem, it's in the interest of the government to do anything possible to delay the problem for the future generations. That's why I have reservations about US, Canada, UK, Australia and others doing the same thing. It also doesn't help when your entire population growth is depended on immigration, as you can, theoretically, keep the demand higher without many complaints, while limiting the supply.
There's also the Japan problem, but it's weird. In Tokyo we're seeing rental prices actually going up, as it's the only region where the population is growing for all the wrong reasons.
Oh well, good luck to us.