Sure, they want a house so they can live in it. But who wants to pay a million dollars, which you either have to pay interest on (if borrowed) or can't collect interest on (if not), when it's only going to be worth the same amount of money in 30 years? At 5% interest, the lack of equivalent appreciation more than quadruples the opportunity cost of buying the house over the course of 30 years. It changes what they're willing to pay.
> Also I disagree that they are universally destructive - how else do you explain the long term success of high price cities such as London, New York City, Hong Kong, etc.
It has always been the case that some cities are more expensive than others, but that's not what we're talking about. Nor are we talking about small affluent sections like Manhattan. If you look at, say, Brooklyn, it was historically affordable to ordinary people (and 20 minutes from Manhattan). That's what's changed.
And there's no way housing in San Francisco isn't a massive bubble. It's hard to predict how long it will be before the crash, but it's obvious that it's not sustainable.
