Yes houses are more expensive than ever and that is a horrible thing and it isn't about just supply and demand. Economics is not a simple game many things effect prices other than just supply and demand. One of the big changes that has occurred is that families now generally have two wage earners and this is not as much an option as it is a requirement for most home buyers. People are also no longer as likely to build their own homes themselves. All these factors play a role.
What I see is true home value (what you actually get) is becoming further and further removed from what people are actually paying. I fear that this combined with unreasonably high property tax rates is going to reach a breaking point not because of lack of supply, though in some markets this is true, but because a majority of Americans are already over extended in so many ways and have been taking out record numbers of home equity loans. I foresee lots of foreclosures in the near future.
I hope I'm wrong but I certainly don't like these low interest rate loans allowing people to purchase homes that they in the near future will not be able to pay property taxes on. I also don't like what I see in property purchasing and selling that resembles stock market day trading which seems to be driving property values artifically high. I think eventually communities will have to consider indexing property taxes to income so as to not force people out of their homes.
My property taxes have increased just 8% in the 13 years I have lived in my house, while the value of my house has increased at least 4 fold due to improvements and inflation.
I am just waiting for the the tax ax to fall. Some dim wits in county gov are eventually going to see what a tax bonanza is there for the taking.
It seems I've been hearing this Chicken Little story for 30 years now.