They're a complete fabrication. They're high so the bank can get the most profit off the transaction. Prices are reached though unscientific and arbitrary methods. I live in a farm town full of poor Mexican migrant workers near Miami. I present to you a tiny beaten down house with no attic, no garage, no pool, a horrible school district, terrible public transportation, very little commerce, and a 3 hour traffic filled commute back and forth to Miami, for all that wonderfulness you will pay minimum $150,000 to get that beaten down house in dire need of maintenance. New houses are in the $250-750K range. Real estate prices are complete garbage, and the government will never do anything about it because those inflated prices give them their tax dollars. It's a system which places value on perceived value and ignores actual value.