Housing is the world’s biggest investment class, with home prices more than quadrupling in real terms during the past 70 years, and yet the housing sector is damaging the U.S. and other developed economies around the world. Housing is simply too expensive and is suffocating other components of the economy.

Those are a few of the conclusions made by a major housing report published by The Economist Jan. 18 edition. The statistic-rich series of articles note the rate of U.S. homeownership slumped to 62.9 percent during second-quarter 2016 — its lowest rate in 51 years. (It currently stands at 64.3 percent, according to the U.S. Census Bureau.)

Meanwhile, millennials, leaden with student debt and working lower-paying jobs than their parents and grandparents, have found homebuying to be out of reach. Also, during the past 10 years the homeless population in Los Angeles has risen by 50 percent, and in New York City by 60 percent during the same period.  San Francisco is believed to have an even worse homeless problem.

This has become the case despite the United States providing some of the most generous fiscal incentives to promote homeownership, the very incentives that have largely fueled the booming housing market starting after World War II. Official estimates collected by The Economist indicate the U.S. government forgoes more than $200 billion per year subsidizing homeowners through the tax code.

Part of the problem identified by the report is the world’s richest cities are not building enough housing and have placed such stringent constraints on new-home construction that the existing housing base is seeing values driven skyward. Great news for homeowners and investors, bad news for homebuilders and would-be homebuyers. Witness that Manhattan approved building permits for 13,000 new housing units in 1960 alone, while during the entire 1990s only 21,000 new units were approved.

Stringent policies in many U.S. cities have resulted in extraordinarily uneven home pricing. The magazine offered up this comparative example: Pine Bluff, a midsized city in Arkansas, has an average house price of $90,000, while the average home price in San Luis Obispo, Calif., with restrictive building policies, is $725,000, even though building costs across the United States are fairly consistent.

Until the mid-20th century house prices across the developed world were fairly stable. Since then, however, they boomed both relative to the price of other goods and services and relative to incomes. Rents have also shot up. The Joint Center for Housing Studies at Harvard found that the median American rent payment rose 61 percent in real terms between 1960 and 2016 while the median renter’s income grew by 5 percent.

The Economist called the situation a “remarkable transformation.”

The issue has given rise to activists who are arguing the solution to lower homebuying and rental prices are more relaxed construction policies in tight housing markets.

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.