[vkou]

This is a great narrative, until we remember that lumber is a tiny fraction of the price of a house.

[rwcarlsen]

It was, but now it's actually a very significant component. In many regions, the cost paid for lumber went from like 5% of the cost to ~20%!

[ncann]

It still adds 20-30k when building a new house so not exactly a trivial amount.

[vkou]

Which in practice just means that the land didn't get a chance to appreciate by 20-30k.

Houses cost every spare penny that we can save up to pay for them. Whether the pennies end up going into raw materials, or speculators doesn't really matter to the end purchaser.

If labour and materials became free tomorrow, the cost of housing would remain unchanged, but the cost of land would rise to pick up the slack.

[rhodozelia]

Thank you for a very insightful comment. Houses are worth what people will pay for them, and when you can borrow money so cheaply they are worth a lot! What else are you going to buy? Having a nice place where you spend a lot of time that is near things you do be it work or recreation is worth as much as you can afford to pay - a house in a good location saves precious minutes of your life!