A major factor causing increased demand for housing that's rarely discussed is the dramatic drop in the number of people per household.
Consider a hypothetical city with a population of 100,000:
1960: average household size: 3.63 persons
1960 housing units needed at 3.63 persons/household: 27,548 units
2020: average household size: 2.28 persons
2020 housing units needed at 2.28 persons/household: 43,860 units
So even with zero population growth, the city would need 59% more housing units.
That increase in demand drives up the price per housing unit.
At the same time, the decrease in the number of people per unit reduces each household's earning power, and makes it much more difficult for that household to afford the cost of housing.
That is interesting. Is this discussed anywhere, more formally? I guess the simple reason is that people had more children previously. But then, what about the second order effect that households with fewer children also need less space and would be happy to have an apartment rather than a four bedroom house?
I have seen some discussion about this. It's usually in the context of a divorce, converting one household into two households.
To answer your question about households with smaller numbers of people, it all depends on what you do outside of work and what's important to your life. For me, having a home office, home computer lab, gardening, astronomy, hiking, casual birdwatching, and turning pieces of wood and metal into sawdust and metal chips are all important and completely incompatible with apartment living. For my partner, having an art studio is incredibly important. Again, it is incompatible with apartment living.
Traffic and city noise are not good for me (they raise my blood pressure), which is kind of why I am okay with losing my hearing. I can't hear it as much as my partner can, and I'm not sure I want to get hearing aids. I would've moved farther away from the city, but my partner works deep in Cambridge, Mass., and we went as far as she could stand the commute.
> For me, having a home office, home computer lab, gardening, astronomy, hiking, casual birdwatching, and turning pieces of wood and metal into sawdust and metal chips are all important and completely incompatible with apartment living.
Good question. Of all my interests, hiking is the most compatible with apartment living. :-) When I was living in an apartment, the usual problem was finding a place to store equipment. I eventually gave up and found a way to semi-permanently stage my kit in my car. This made it easier to have a grumpy moment and flee to a trailhead.
Consider a hypothetical city with a population of 100,000:
1960: average household size: 3.63 persons
1960 housing units needed at 3.63 persons/household: 27,548 units
2020: average household size: 2.28 persons
2020 housing units needed at 2.28 persons/household: 43,860 units
So even with zero population growth, the city would need 59% more housing units.
That increase in demand drives up the price per housing unit.
At the same time, the decrease in the number of people per unit reduces each household's earning power, and makes it much more difficult for that household to afford the cost of housing.
No wonder few can afford to buy their own place.