Residential real estate construction has lagged population growth for decades as the average age of the first-time homebuyer has gone up and real wages have stagnated. The largest generational cohort in the United States (the post-WWII one with the nickname that everybody is tired of hearing) is getting out of homeownership as they retire southward or head to assisted living. Many of their family homes are in areas in which young people can't or don't want to live. There's going to be a great value reckoning as this asset transfer takes place - I have trouble believing that "line go up" will apply as it has post-COVID with so many sellers and so few ill-equipped buyers.

On the other side of the coin commercial real estate is often treated as financial leverage and a store of value instead of a going concern. From what I understand commercial landlords very frequently use their existing properties to collateralize new loans in a daisy chain-type fashion. Recall all of the grumbling about the end of downtowns and what would happen to CRE paper if people didn't return to the office a few years back? We came pretty close to the precipice and avoided it by artificially propping up the utility of these buildings. What happens during COVID II: The Quickening?

Combine all of this with a broader economy that's been vigorously puffed down to the filter with two drags of AI smoke left in it and things don't look particularly rosy for RE as an appreciating asset class. Scarcity doesn't automatically imply value perceived or otherwise.

Not financial advice, not an economist, just my $.02.