One of the points I’ve made repeatedly is that we can’t understand the urban housing crisis (why housing is expensive in many urban areas) without accounting for income inequality: you can’t have gentrification without a gentry class. Ian Welsh makes a very good and related general point (boldface mine):

Ever since the financial crisis there has been a lot of screaming about inflation. Screaming that it should show up, with all the money being created by central banks and privately, and isn’t.

But it is.

A painting of Christ by the Renaissance master Leonardo da Vinci sold for a record $450 million at auction on Wednesday, smashing previous records for artworks sold at auction or privately.

New York and London and Vancouver Real-Estate, along with a number of other cities (China’s printing more money than anyone else), is also where it showing up.

And it’s showing up for ordinary people, not as hyper inflation, but as high inflation of some things…

But mostly it is showing up at the top end, in things that rich people bid up. $450 million is damn near half a billion, the ability to blow that amount of money on a single painting is absolutely crazy, no matter who the painting is by. It could not have happened even 20 years ago, and did not happen even ten years ago.

The rich are floating on an ocean of money, and they have nothing to spend it on that really matters, so it’s going to 3rd homes, real-estate speculation and conspicuous luxury consumption (which is what this is.)

In terms of overall inflation, housing prices in booming urban areas, which isn’t that much of our total housing stock aren’t budging the needle too much. But in urban areas, the surge in prices has been tremendous. There is a trickle-down effect as housing prices are bid up in areas where housing is limited. There is also a displacement effects as areas with ‘good bones’ are gentrified. And there is no incentive, when so much money can be made targeting the well-off, to build moderate- and low-income housing. So regions of the U.S. get something like inflation, even if it’s technically not very inflationary.