Starter homes and retirement homes were largely pushed off the market by the real estate bubble of the early 2000s. People who bought land with a home cheaply made themselves rich knocking down a perfectly good small house and building a mansion on the lot instead.

Housing developments in suburbia with HOAs ballooned in that same timeframe, saturating the market.

Older neighborhoods in cities were often targeted by eminent domain law abuse as "blighted" so they could be bulldozed and sold to developers.

I remember elderly friends of my parents who had a post-WW2 neighborhood house with 2 bedrooms and a single bath, a living room, a dining room, and a kitchen on a compact main floor. There was an attic for storage and a basement with laundry and a workshop or sewing space that could have been an extra bedroom. It wouldn't meet modern code for egress windows, but that kind of issue is relatively easy to remedy, especially compared to total demolition.

Greed is a constant in humanity. However, the political and legal incentives of the time incentivised especially short-sighted and destructive behavior. Zoning laws, artificially low interest rates with easy credit, and the assurance of federal bailouts if it all happened to go wrong rewarded greedy behavior at every level.

Sure enough, it all went wrong. Now we have consequences including high inflation rates raising prices, and a distorted market of durable goods failing more and more to meet consumer demand. But we can't have the illusion of prosperity torn away when the baby boomers rely on their real estate as a major part of their "investment portfolio," so that bubble and the stock market must be propped up with easy credit, and never allowed to correct. So we have the "K-shaped economy" distorted by politicians trying to support their corporate cronies and aging voters while everyone outside those groups suffers, and the popular "alternative solution" seems to be more of a command economy because "the free market failed."