Bear,
THAT is how the "housing bubble" (real-estate inflation) happened. It's all about "property value" under the guise of "oh look...your investment went up in value." A house is not really an investment, it's really an expense. Sure, it has value. But this expectation of it constantly going up (supposedly due to less land and increasing demand) creates this "bubble" effect.
So it's a double-edged sword. On the one hand, it's worth more. On the other, they charge more.
P.S.
Quotation mark use in this post, copyright and TM AttyPops 2015.