Overhead may be part of it, but it's not all of it.
The cost of living in Japan has been astronomical for years, yet for quite a while some years back they were kicking our ass in many different categories, and aren't doing all that bad, now. There has to be more to it than overhead.
Kids in Japan bust their butts in school. So do kids in India. In America, "work ethic" isn't what it used to be. That might be part of it.
Housing prices, adjusted for inflation, rose about 2.9 percent a year from 1968 to 1980. They were almost flat from 1980 to 1994, and then rose again at about 3.4 percent a year until 2002 (the article was written in 2003).
I think what you're seeing is the people in urban areas getting excited about prices. Demand in these areas is very high. It's also no coincidence that these same areas are often subject to massive restrictions on development, which reduces supply.
Current Events » in reply to Now that you've gotten the obligatory knee-jerk reaction out of your system....
Overhead