What do you mean by small and I think context of where you live matters.

Around me there are an abundance of 0.75k-1.5k sqft homes, typically they are older (1940-1980), and they are between $180-250k. They aren’t in high demand because they are older, they may need some TLC, they have old styles, they are 45 min - 1 hour drive from the big city, and they may not be as big as people want.

I have coworkers who lament not being able to buy a house, but when you talk to them they are looking at 2500+ sqft, less than 10 years old, 20 min from downtown, but $425k.

EDIT: After typing this I opened Zillow and within 30 seconds found a house across town that’s 980 sqft, $115k, 1950’s, but you’re gonna have a 45 minute (minimum) commute every day unless you leave for work at 5 am.

EDIT 2: Oh and 0.34 acres with no HOA

I think there are more factors at play than you’re giving credit. For example, Germany has an average cost of 3000-5000 euro per m^3 which translates to ~$320-540/sqft. In the US the average cost of a house is ~$146/sqft in the south, ~$156/sqft in the midwest, ~$220/sqft in the north, and ~$195/sqft in the west. So while the 8x vs 4x comparison is accurate, you’re probably also getting 50% less house in Germany.

A few years ago I saw an article that Gen Z struggled with file organization. In basic terms, search functions have gotten so good that the majority of Gen Z doesn’t use file organization on computers or phones. When in a work setting they are confused when digital items need to be organized into a file structure. Part of the problem is that most of them have never had to use a real world filing system. Part of the problem is that they are only used to handling their own disorganized files. In a business setting it generally isn’t acceptable to dump all your files into a local “Downloads” file and rely on the search function to locate mission critical files.

When the article I am referencing came out other people stated that they had experienced similar phenomena in the PC world. They remembered when soldering was an expected norm of PC building, but with the passage of time it was no longer necessary or expected.