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That is rampant inflation and it is probably not sustainable. It is becoming very difficult for ordinary people to buy houses in mnay areas.

There is an upper limit to how big a percentage of their income people will be willing to spend on fancy housing. In the past, people were willing to plop down a big chunk, in the expectation that housing prices would increase faster than inflation, and that their income would rise and make their mortgage payments a smaller part of their future income

Once those expectations are shattered, the bubble will burst. People will have a choice between spending 40% of their net income on a house in the suburbs, or getting an apartment and having more disposable income. An increasing number of people will forego the suburban house

A lot of communities have artificially propped up real-estate prices by enacting legislation that limits the amount of available housing, whether by restricting development, or the kinds of houses that can be built, or the minimum size lots. This will only work in the short term. In the long term, people and businesses will move to where real-estate prices are reasonable

In the past, people were willing to plop down a big chunk, in the expectation that housing prices would increase faster than inflation, and that their income would rise and make their mortgage payments a smaller part of their future income

I would phrase it differently. Housing has been the primary entry point of inflation into the economy due to actions of the GSE money pumps. These privileged enterprises now constitute a parallel financial system and unlike the banks have no multiplier restrictions (I believe Fannie is at 50 to 1 debt to equity right now). The inflation has already occured in the housing sector and is now spreading to the rest of the economy.

A lot of communities have artificially propped up real-estate prices by enacting legislation that limits the amount of available housing, whether by restricting development, or the kinds of houses that can be built, or the minimum size lots.

You just described the situation in Portland and the Willamette Valley. (Oregon) My wife and I bought our first home 3 years ago. 3br 2bth 1400 square feet on a 80X100 ft lot. $127,000 The funny thing is that there's plenty of space in Oregon, only 3 million or so population in a state that pretty big. Urban growth bounderies and land use laws are bleeding Oregonians dry.