It's actually that a small cheap home and a large expensive home aren't much different in cost for a builder, but the second nets way more profit. So no builder wants to build and sell starter homes. Thus, housing shortage for working class people looking for affordable homes.

Somewhat still impactful is that construction has a worker shortage, but that's probably in part cause they don't get paid enough to attract more new tradespeople. If they DID get paid enough, it would drive up prices further since builders still want the same cut and their margins aren't that crazy to begin with.

How do we incentivize building and selling starter homes? They need to be more profitable relative to expensive big homes, or working class people need more income to afford them to increase demand at rates builders would make good money on due to volume.

I think the growth of townhomes for sale and five over one condos is helping with this somewhat, but not enough. Many of those get used for apartments or short term rental too because those are still more profitable than just selling.