There are surely a variety of reasons, some market-specific, many more broadly applicable.
You touch on many, if not most.
Clearly, in general terms, demand is rising heavily in certain, highly popular markets, notably, in North America, SF, Seattle, DC, NY, Boston, Toronto and Vancouver; but many others as well though mostly in lesser intensity.
Before addressing supply, what's up w/demand?
A few things.
Obviously, a growing population writ large. The U.S. continues to grow by a few million each year. Canada by about 400,000.
Those new immigrants tend to disproportionately end up in those 'high-demand' markets, because they are the largest cities, the most likely to feature common linguistic and cultural communities, and the most likely to have the greatest range of employment opportunities.
That puts pressure on any city's market.
We are, however, also reaching a point in many centres where further urban sprawl no longer makes sense. Completely apart from whether one wants a back yard, or a suburban lifestyle as opposed to 'urban' living; commute times are increasingly unwieldy at the outer edge of urban markets.
No one, or very few people want to commute 2 hours to work.
As that limits sprawl, you're also seeing some general trends towards more urban living and employment. Part of that is merely cyclical, one generation loves carpets, the next wants hardwood floors; but part of that is also the lived experience of built-out suburbs that are higher in traffic w/longer commutes than a previous generation experienced, thus driving at least some shift towards more urban living.
In cities that are already built out and even moderately dense, that puts enormous pressure on the existing market, and forces prices upwards.
The next issue is low-cost credit. For a previous generation, buying a home meant facing Mortgage rates in or about 4-5% (with a brief stint in the late 70s/early 80s of 15%+ .
Typically down payments also had to be 10% plus.
Those obstacles reduced the number of buyers in the market somewhat and made them more price sensitive.
This restricted excess pricing to some degree.
In an age of sub-10% down and Mortgages at 3% people can afford to carry a larger purchase price, and do.
Beyond that, you have the change in social organization creating demand
By which I mean, delayed marriage/cohabitation, which creates a new need to house people in that post living with the parents stage of life, before any 'settling down'.
That's a market segment that used to live w/their folks until 20, 22, 24 and then move out to get a house as a couple.
Today, they may move out at 24, but they get 2 homes/condos/apartments for 5 or more years, before couplehood kicks in.
That speaks to the demand side of the equation.
The supply side, has a few issues of its own.
The first is the so-called declining middle class.
By which I mean the greater divergence in incomes between a lower-income group and the 'upper-middle'.
This creates a problem, in a few ways.
First, that upper-middle group, has seen income increase well above inflation over the last 20 years.
As such they can now afford to bid for houses to get exactly what they want (forces price up, froths the market); but they also, often own more than one home. Both homes purchased for speculative investment, and for rental income are increasingly common, particularly in the 'hot' markets.
That has the effect of withdrawing supply on the ownership side.
While alternatively, those whose relative economic situation is stagnant or deteriorating means people at that end can't keep w/the market at all.
In other words, affordability is relative.
But there's yet another issue, which is shortage of multi-residential rental housing to meet the needs of that group.
Here's the problem, if you had an apartment in SF 20 years ago in area 'x' that was renting for $800USD a month and was somewhat affordable to a middle-class person; that same spot, due to factors outlined above is now renting for $2,400USD a month.
That is closely associated w/the high cost of land, which means even if a developer were to come along and build new rental housing, they must recover the cost of the land.
They also have to do so while meeting more rigid building codes than a previous generation. From sprinklers, to accessibility requirements, to emergency power, to internal storage of waste, core costs are up well over 25% completely apart from land/labour costs.
Construction in highly urban areas is also more expensive to carry out than in green-field pastures.
This means brand new rental housing would be unlikely to come in at less than 20% ABOVE current average rents.
All the while, a significant chunk of those needing said rentals have depressed incomes, and could barely afford the inflation adjusted rent for the apartment described above.
That tends to stifle construction.
New rental housing could be built more cheaply in suburban areas; but then you get into NIMBY issues.
On top of that those areas are often less desirable to renters, so you get into questions of whether the ROI is there for a developer at the rent the market will bear.
Finally, you have two other issues, one is foreign money in major markets; particularly capital from China where newly affluent locals are looking for legal places to place some of there money outside the country. That often lends itself to real estate.
The other is the absence of the government from being a material player in either the rental or the ownership market, in ways they clearly were in the 20 years post WWII.
From low and no interest mortgages for returning veterans or those who built co-ops, to the direct construction of public housing, government was a material player for a time.
For the most part, in both the U.S. and Canada that began to change by the mid 70s, and was all but gone by late 80s.
The result, a constriction on supply, particularly for the low-end of market.
Or at least that might partially explain the situation, I think.
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