Agree but unfortunately when you point this out usually you get downvoted to oblivion.
It is a supply demand problem and I would even add to the point that the financial crisis helped set us up for the current environment we are in. We are still not even close to the historical level of housing starts pre 2007-08. We lost a number of builders in that process.
Even in places where home building is permissive, you never see a newly built home that is cheaper than the surrounding area's prices. I wouldn't chalk it up to a 100% supply issue. Nobody builds inexpensive apartments or small 1950's era single family homes. Every new home start is the same "luxury townhome" that's going to sell at or above prevailing home prices.
You're right that that is what gets built. And that's completely OK. Imagine one of those new big houses gets built. Someone buys it, they have the money to afford it. If you don't build that house, that person with their money still exists. But instead, they outbid you for one of the units that should be less expensive. That raises the price of existing housing and keeps you from buying something. That's the process that is the problem when you don't add new supply.
Hmmm not sure how to digest that comment. I absolutely see a lot more volume of "patio" homes with the total house ~800-1k sqft. Home builders are a bit of a laggard to demand but they are adapting to the new environment and smaller homes are in pretty significant volumes. This is happening in multiple states/markets. They very bare bones homes, sometimes a small backyard, sometimes just a patio. But they are incredibly cheap, you will get a 1,100 sqft 3bdr home for ~$200-220k. Thats a DFW price.
It is a supply demand problem and I would even add to the point that the financial crisis helped set us up for the current environment we are in. We are still not even close to the historical level of housing starts pre 2007-08. We lost a number of builders in that process.