I came across a good article in Seeking Alpha discussing the how housing is outpacing inflation. The author makes a good point of saying that the cost is rising quickly and inflation is starting to rise leaving some people unable to buy homes. This might depend on where you live. If you are in San Diego this is defenately true but if you live in a rural area might not be so true.
Part of the problem is that we want bigger houses than we need. We are always looking to get houses that reach the top of our limit thereby pushing up the prices for everyone else. In San Diego, people with loans are outbid by people with cash. They simply can't keep up and the owners know there are a dozen waiting in line.
Some of us would do better with a more modest home and then put our earned capital into revitalizing them to help urban and rural areas. Younger people may need to be a little more inventive on where they find their house and where they are willing to live. Big cities will continue to demand high prices that are outpacing both wages and inflation.
It may be possible to consider alternative types of houses that are smaller and easier to construct. We have become accustomed to luxury even while the real earning power has drop historically. We may need to be accepting of smaller houses, more basics, and then put in the elbow grease to stylize them the way we want. At present, housing will continue to push the limits until there is another bubble bust.
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