Housing should follow the normal economic laws but it doesn't seem to. Part of it is regulation, and part of it is an odd kind of scarcity. If there were no housing regulations, I'm sure you' get a lot of new housing in the Bay area and people would live in there (despite it being potentially unsafe). Heck .. I was actually entertaining the live-in-a-container option :-p

I'm still struggling to understand the scarcity aspect of housing. Supply of land isn't increasing so you'd think the asset would increase in price over time. That said, population isn't growing that much - prices in a city like Toronto have reached epic proportions fueled by a combination of speculation and foreign investment. To me, the problem lies in the fact that we are living in a highly leveraged economy. Will that ever stop? Doesn't seem like it.