Houses are so expensive today mainly because there aren’t enough homes for the number of people who want them, and the cost of borrowing and building has gone up at the same time.

The core problem: supply vs demand

When more people want homes than there are homes available, prices rise — classic supply and demand. Since the late 2000s, many countries (especially the U.S.) have underbuilt housing, so there’s a backlog of people all chasing a limited number of properties.

  • Years of underbuilding after the 2008 housing crash left a big gap between how many homes exist and how many are needed.
  • Population growth, smaller household sizes, and more people wanting to live alone all push demand up further.
  • In popular cities and job hubs, this imbalance is extreme, so prices stay high even when the broader market cools.

A simple way to picture it: imagine 20 people bidding on 5 houses. Even if everyone is cautious, competition alone pushes prices up.

Money side: mortgages and inflation

Housing isn’t just about the sticker price — it’s about the monthly payment, which is heavily shaped by interest rates and inflation.

  • Mortgage rates rose sharply from the ultra-low levels of the early 2020s, so the same house now costs much more per month in interest.
  • Higher borrowing costs reduce how much buyers can afford, but because supply is tight, sellers often don’t lower prices enough to offset that.
  • Inflation raises the prices of almost everything: materials, labor, land preparation, fees; those higher costs get baked into sale prices.

So buyers get squeezed from both sides: high prices and expensive loans.

Building and land: costly and constrained

Even when developers want to build more housing, it’s not cheap or simple.

  • Construction costs (materials like lumber and concrete, plus skilled labor) are significantly higher than pre‑pandemic levels.
  • In many markets, researchers find that regulatory limits on building (rather than raw construction cost) are the bigger driver of high prices.
  • Land near jobs, transit, and good schools is scarce and heavily competed for, so its price skyrockets.

One study notes that building expenses often make up 60–70% of the total cost of bringing a new home to market, but rules that cap how much can be built on that land often matter even more.

Rules and zoning: policy that locks in scarcity

Local rules can unintentionally keep housing scarce and expensive.

  • Single‑family zoning (only one house per lot) prevents townhomes, duplexes, or apartments that would increase density.
  • Minimum lot sizes, parking requirements, and strict height limits all reduce how many units can be built on a given area.
  • Lengthy approvals and neighborhood opposition (so‑called “NIMBY” politics) delay projects and add cost and risk.

In some places, the vast majority of residential land is reserved only for detached houses, which makes it almost impossible to add enough units to bring prices down.

Policy angle example

Redfin highlights that in California, around 96% of land zoned for housing is restricted to single‑family homes, contributing to one of the worst housing shortages in the country.

Economic cycles and pandemic aftershocks

Recent years added extra chaos on top of these long‑term issues.

  • During the pandemic, very low interest rates and stimulus boosted demand just as supply chains and labor shortages made building harder.
  • People wanted more space (home offices, yards), increasing demand for larger homes and suburban properties.
  • Supply chain issues made key materials more expensive and harder to get, raising building costs and slowing projects.

Even as some of those pressures eased, the structural shortage and zoning constraints remained, so prices didn’t fully reset.

What people on forums are saying

If you look at online discussions, you see the frustration and mixed experiences.

“I’ve been tracking local listings around my area and prices have been plummeting… and it still is sitting without any offers.”

“Why are houses more expensive in the US?”

On Reddit and other forums, people commonly blame:

  • Investor purchases and short‑term rentals soaking up supply.
  • Wages not keeping up with home prices and rents.
  • Local differences: some markets are seeing price cuts, while others stay brutally expensive.

You’ll also see a lot of debate about whether it’s mostly cheap money in the past, current high rates, corporate landlords, or local politics — usually it’s a mix, layered on top of the basic supply‑demand imbalance.

Multi‑view: is it just “greed”?

Different viewpoints try to explain who or what is “to blame.”

  • Economic view: The main culprit is limited supply plus strong demand; if you build more, prices will moderate across the board, even if the new units are “luxury.”
  • Regulatory view: Zoning and building rules are key — loosen them and allow more density, and long‑term prices should ease.
  • Cost‑push view: Rising material and labor costs, plus inflation, mean building and maintaining homes is genuinely more expensive.
  • Popular/online view: Many people focus on investors, corporate landlords, and “greedy developers,” especially in very hot markets where locals feel priced out.

Research tends to find that while construction costs matter, supply limits from regulation and land scarcity usually explain more of the sustained high prices.

Where this leaves buyers and renters

Put together, these forces create an affordability crunch, especially for first‑time buyers.

  • High prices plus higher mortgage rates mean monthly payments that are out of reach for many households.
  • Limited starter homes and strict zoning push younger buyers into renting longer.
  • In many cities, even rent is expensive because the same supply issues affect the rental market.

Some articles suggest coping strategies like looking in less competitive areas, considering smaller or older homes, and watching for policy changes that add new supply, but these are band‑aids on a systemic problem.

TL;DR: Houses are so expensive because for years we haven’t built enough in the right places, rules and land constraints limit new supply, inflation and construction costs have risen, and borrowing has gotten pricier — all while demand for housing stays strong.

Information gathered from public forums or data available on the internet and portrayed here.