Expectations are higher, competition is stiffer, and the gap between bottom and top end has grown, but by and large (especially in the US), the middle class quality of life has gone up.
Obviously specific regions that failed to transition out of low value-add manufacturing and agriculture have suffered, but the vast majority of Americans live in cities doing or supporting high value work.
It's not even competition anymore. It's a screaming void that deafens everyone, causing them to reach for the nearest "acceptable" thing just to quiet the endless cacophony of human struggling.
Yes this is a big problem but a large part of this is the total elimination of starter homes from the market. I.e. they would be able to afford the types of homes that earlier generations started in, but those homes simply don't exist anymore.
It's kind of a quality of life degradation, but it's a bit more complex than just "an attainable item is no longer attainable." It has never been normal to buy a 2600 sqft, 4 bedroom home at the start of a career.
It's not that starter homes were eliminated or were torn down, it's that construction stopped in cities. The downzonings of prior generations, combined with the limited ability to expand by car travel, finally hit its limit and the urban planning apparatus was in complete capture of people who didn't want the built environment to change.
The reason construction slowed down so much is that developers fear another 2008. We have just barely gotten back onto a historically normal-ish pace of construction: https://fred.stlouisfed.org/series/HOUST
And this talk of "just build build build," while not wrong per se, overlooks the fact that of course prices will come down, which then discourages construction. The system is self-equilibrating. 2008 reset the equilibrium point very low for 15 years, and now the nature of the costs of construction (labor and land) means it is not advantageous for anyone to build starter homes, and it's hardly advantageous to build homes at all.
Restrictive zoning is a problem and would be a very tidy explanation of all the woes of residential in the US, but there really isn't much evidence for it mattering that much in the grand scheme of things.
The single most important factor in home prices is local income levels. This gets baked into both land prices and labor costs, which then makes it very difficult to profitably build much, and completely unprofitable to build entry level homes.
The building industry never really recovered after 2008 because the only surviving companies were extremely cautious. In order to get more builders, there needs to be more places to build, and entry into the industry needs to be easier. It's all permitting, zoning, and discretionary processes stopping housing from being built where it's wanted to be built.
Well I've shared a statistical analysis and raw data series backing my points and directly contradicting yours. On the flip side I guess we have "trust me bro."
To the extent "it's all [any individual cause]", that cause is rising incomes. The second major cause of rising housing prices is cost of inputs (labor, land, material). Zoning definitely plays a role, but again: there's just no evidence that "solving zoning" will actually solve affordability. We should do it anyway because it'll solve all sorts of other problems in our built environment, but there's not good evidence affordability is one of them.
You ar also doing "trust me bro" with a statistical analysis that at most shows that prices rise with wages when supplies are constrained. Which, yes! That's what everyone says! K shaped recoveries happen when there's unequal access to opportunity, and supple constraints in access to the geography of good incomes is exactly the sort of supply constraints. Further, in order to get their weak results they do silly things like transform "supply constraints" into an indicator variable, and on the basis of that single odd regression try to overturn a huge body of literature showing the opposite.
Yet this one strange paper keeps getting cited as if it were God's own truth, the holy grail of economics that changes everything that was known before.
Supply restrictions are not binary, though that's how your paper treats them, and they perform none of the causal analysis that would be needed to extend their analysis to the conclusions you are trying to draw.
Here's a random paper with completely different results that agrees with the rest of the field:
I remember the last time the "we can't change zoning" folks passed around a paper like the NBER paper you shared, and it was one about transit-oriented-development in Chicago, where allowing small upzonings close didn't change pricing much. It was contra to the vast majority of the literature, covered only a small geographic area with fully adequate housing supply, yet for a few years nobody could suggest doing the obvious zoning reforms without people claiming that Chicago proved that upzoning doesn't change pricing.
And again, supply will always be constrained below "affordability" by virtue of there being no profit available at affordable price points given the costs of inputs. So yes, if we imagine a world where supply isn't constrained first by the actual cost structure of construction, then clearly artificial constraints are the sole problem and solving them would solve the problem overall. But that's not the world we live in!
From your random paper:
> Fig. 5 shows the event study results for the change in log hedonic rents. In contrast to the housing supply, we find no statistically significant effect of upzoning on rents.
So it looks like your paper actually agrees with mine.
As I've said over and over: we should overhaul zoning for sure. However there is not good evidence that will solve affordability, and there's basically zero evidence that it is the cause of "all" the problems, as you so boldly claimed.
Expectations are higher, competition is stiffer, and the gap between bottom and top end has grown, but by and large (especially in the US), the middle class quality of life has gone up.
Obviously specific regions that failed to transition out of low value-add manufacturing and agriculture have suffered, but the vast majority of Americans live in cities doing or supporting high value work.