The majority of 18- to 29-year-olds in the US are now living with their parents

He had state food prep certifications. The ALF who eventually hired him got a worker who's on time every day, easy to get on with & does his job with consistency and competence.

Take Dallas Texas as an example. It wasn't affected very much by the 2008 bubble (probably because of high property taxes). The median price in 2000 was ~$100k and is now ~$240k [1]

Interest rates in 2000 were 8% [2]. They're currently 2.94%.

=PMT(0.0294/12, 30 * 12, -240000) # TODAY

$1,004.10

=PMT(0.08/12, 30 * 12, -100000 * 1.025^20) # 2000 with 2.5% inflation

$1,202.36

WOW! House prices are cheaper today! Not really. Let's take taxes into account.

Property taxes:

=240000 * 0.0208/12 # TODAY

$416

=100000 * 1.025^20 * 0.0208/12 # 2000

$284

Insurance is about $30 a month more today. And since the mortgage interest today is less than the $12k standard deduction, it probably won't get any tax benefit today. In 2000, it'd be about $100 a month.

But then there's the opportunity cost, too. Today your down payment is ~50% larger. The opportunity cost is about $100 more per month.

$1,004 + $416 + $30 + $100 = $1550 # TODAY

$1,202 + $284 - $100 = $1386 # 2000

It's only a ~12% difference. If you're in a more pricier market, the tax deduction was much juicier. Real monthly payments are ~50%+ more expensive. If you're an investor, cap rates are trash. Plus you're taking out debt to income that at any other point in history would seem insane.

The monthly payments aren't the big issue. The real trick is that by lowering interest rates from ~8% to ~3%, the Fed created $14T in real estate wealth out of thin air. That's where most of the inequality really stems from. For most people, their house represents the majority of their life's savings. If you're older and own a home, the Fed doubled your wealth. If you're younger and don't own a home, the Fed make increased your housing price by 5-20%, devalued whatever savings you had, and forced you to take on extreme levels of debt for a similar monthly payment on a house (which you probably don't have, because in real terms you need a ~50% bigger down payment).

[1] https://fred.stlouisfed.org/series/DAXRNSA

[2] http://www.freddiemac.com/pmms/pmms30.html

Underwriting standards for mortgages are typically based on loan to value (LTV) and debt to income. In that calculating, value is traditionally defined as "what the market currently values comparable assets at" (aka comps). For debt, providers of credit (banks and the central mortgage agencies) are more concerned with ability to repay, rather than absolute debt. Consequently, monthly payment >> total price.

Therefore, in business as usual (moderate to high interest rates), there are caps on how much individuals can leverage with mortgages (i.e. eventually their LTV or debt to income will exceed standard limits and they'll be denied a mortgage).

Unfortunately, both of those key components are heavily influenced by central bank interest rates. If the Fed decides to plunk the rate at 0%, mortgage rates decrease as well.

Because mortgage rates have decreased, my resulting monthly payment for the same total loan value decreases. Or, conversely, the total loan value I can assume for a given monthly payment increases.

Because it increases, I can pay more for a house. And either I, or someone else does!

Now, a few months later, someone else wants to buy the 2nd house on the block. They call out an appraiser, who turns the crank on their standard process, looks at comps in the neighborhood, and values the 2nd house in light of the 1st home sale. Because that 1st sale was inflated (inasmuch as we can judge), the valuation on the 2nd house is likewise inflated.

Ultimately, both of these have the end result of raising the cap on how much borrowers can "afford" to pay (assuming static income) for the same asset. Whereby the financial system previously capped their effective leverage at one level, now it's allowing greater leverage (albeit greater leverage that "looks" like the same value, because the underlying inputs have changed).

Tl;dr - The financial system used to impose a cap on how much I could pay and qualify for a standard mortgage. Because of actions taken by central banks and consumer behavior, that financial system-imposed cap has effectively been lifted. Now, the consumer themselves is the primary brake on overpaying. And average consumers? They don't math too good.

Housing is a necessity, but a large detached house in a specific location, is not.