How did Average Houses in Mediocre North American Cities Become so Expensive?

A few months ago, I wrote a post about how the Simpsons animated show is a marker of demise of American middle-class since the lifestyle for its main characters was once considered normal and achievable for anybody with even a semi-decent job in this country. Sometime later, I wrote another post about how stable societies cannot exist without stable families and livelihoods. Another subsequent post was about how the decline of brick-and-mortar retail has a lot to do with increasing financialization of the economy The overarching theme was that the socio-economic changes caused by a specific type of capitalism, also known as neoliberalism or financialism, is behind a lot of the decline seen across multiple sections of society and the economy.

In a couple of more recent posts, I wrote about it is necessary to be a multi-millionaire to enjoy the type of lifestyle security which was once seen as normal by the average middle-class families in this country. Another post talked about how financialism has pushed up the cost of housing in many western countries to beyond the reach of the average person. This rapid increase in housing costs in those countries, during an era of stagnant median incomes, is a deliberate choice since similar increases have not occurred in other developed countries that are less enthusiastic about implementing financialism. As many of you know, in North America, this increases in housing costs are more obvious in certain costal cities (San Fransisco and Bay Area, Los Angeles and nearby areas of SoCal, Vancouver and suburbs, Boston and suburbs, NYC and nearby suburbs etc) or certain major cities (Chicago metropolitan area, Toronto and GTA etc).

However, if you look around a bit more it is obvious that these steep increases are also occurring in parts of this continent not usually seen as “hot” or “fashionable” places. I am treating USA and Canada as one united economic entity, because though they are technically two separate countries, their economies are so tightly coupled that they are one functional entity. It is best to see Canada as the unofficial 51st state of USA, because that is how things work in real life. But getting back to the main topic of this post- how have the supposedly “2nd” and “3rd” tier cities and metros in this part of the world become so fricking expensive. If you don’t believe me, I will present some interesting numbers below to show you how the prices of fairly average houses in what were once seen as affordable cities on this continent gone up within past few years.

Here are some cities and numbers for detached SFHs, and remember that houses in more desirable parts of those cities are significantly higher than the media. Now ask yourself if these prices have any relationship to the median income in those cities.

Denver, CO = 575 k USD

Tucson, AZ = 350 k USD

Phoenix, AZ = 475 k USD

Scottsdale, AZ = 900 k USD

Miami, FL = 518 k USD

Jacksonville, FL = 300 k USD

Tampa, FL = 307 k USD

Las Vegas, NV = 440 k USD

Reno, NV = 625 k USD

Houston, TX = 441 k USD

Dallas, TX = 490 k USD

Austin, TX = 667 k USD

Let us throw in a few 2nd and 3rd tier cities in the 51st state (1 CAD = ~ 0.8 USD). Note that average incomes in 51st state are somewhat lower than USA.

Mississauga, ON = 1, 113 k CAD

Hamilton, ON = 1,003 k CAD

Brampton, ON = 1,073 k CAD

Calgary, AB = 520 k CAD

London, ON = 894 k CAD

So what are your theories for the batshit insane increase in housing prices in North America when compared to some other developed countries- especially in mainland continental Europe and East Asia? Why have prices gone up so much even after we all lived through a similar housing bubble just over a decade ago?

What do you think? Comments?