The market is rigged.
The actual variable is how much can a person pay every month.

This gets run through the home price calculator, and that is how much house the person can afford.
That determines the price the houses can be.

The market responds to that, not the other way around.
Homebuilders look at local wages, and compute how much house can be afforded, and build their houses to meet that number. If that number is not profitable, no houses are built.

Plus you have people going to cities and making sure they write regulations to make sure all new houses are bigger, more expensive. Or make sure that growth is limited.

And the house is not deteriorated, it is deteriorating. In other words, the house needs maintenance, and at some point, replacement. As a house, it is more valuable just after it is built. Less valuable at 10 y.o. Worthless at 100 years old. (if we are talking new construction)