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Why Is Housing So Expensive?!?

So I did some digging, and for anyone confused, in a nutshell, here’s one reason why housing has gotten more expensive over the past few years – and I’m just the messenger. Agree or disagree (argue with someone else).

A lot of this started before 2020 with low housing inventory.

We were already millions of homes short because many builders slowed way down after the 2008 housing crash. Construction never fully caught back up, so the market was tight long before anything else happened.

Then the pandemic hit and poured gasoline on the fire. Interest rates dropped. Cheap borrowing created a buying frenzy, and with not enough homes to begin with, prices jumped and rates eventually followed.

Normally, when interest rates rise sharply, buying slows and prices cool off. That’s the textbook version. But this time, that didn’t really happen because demand never went away.

Why? Because we already had a housing shortage. Even when rates spiked, there were still more people who needed homes than homes available.

On top of that, many homeowners who locked in ultra-low mortgage rates weren’t selling. Giving up a 3% mortgage for a 7% one didn’t make sense. That kept inventory even tighter.

With fewer homes for sale, more people stayed renters, which pushed rent higher.

In many places, buying went from “slightly cheaper than renting” to “much more expensive than renting,” so people stayed in apartments longer.

More renters + limited units = higher rents.

Some of that was demand-driven, and some landlords were also trying to recover losses from the pandemic.

A common comment I see is that corporations buying up single-family homes are the main reason housing is so expensive. That does play a role in certain markets, but it’s often overstated. Institutional investors are only a slice of the overall housing market, and while they can worsen competition in specific areas, they aren’t the sole, or even primary,  driver everywhere.

And then there’s the final piece of the puzzle: greedflation.

Not just big corporations – everyday pricing behavior changed too. For example, I had a friend whose private landlord raised the rent $1,000 a month simply because “that’s what everyone else is charging now,” even though the landlord’s costs stayed mostly the same. That kind of pricing didn’t come from rising expenses…it came from knowing renters had few alternatives.

Across the board, many companies and landlords used the chaos as cover to raise prices far beyond their actual cost increases. And once consumers proved they could be pushed that far, those higher prices stuck.

This isn’t a comprehensive explanation, but it’s a big piece of why housing is so expensive in recent years.