Thats how supply demand works right? Its a stable equilibrium. When supply is low, prices rises to entice supply, supply increases to match demand, prices fall, the rate of increase of supply falls as well until supply approaches to meet demand. It prevents oversupply. If supply slips below demand again prices will rise to pull it back up
Theres no problem here. Thats how the system should work
To some degree yes. However, the problem I'm pointing to is that the equilibrium in several developed economies (esp US) seems to be at a level that makes housing unattainable for a huge number of people.
I.e. Probably due to Baumol's disease, there is no price at which it is both 1) profitable to invest in constructing new housing and 2) makes housing broadly attainable to people.
This is a problem. There are a lot of goods (like a platinum-bodied iPhone) that cannot achieve both (1) and (2). However, unlike all of these other goods, housing is a necessity with an extremely high floor on demand.