> But there’s a long way to go between current property prices and raw construction costs.

How much? Searching a bit suggests that net profit margin in housing industry is about 8.7%

Consindering an investor can get ~3.75% in zero risk T-bills without lifting a shovel, that's about an extra 5% net profit to get involved in building housing.

Which isn't nothing, it's a decent profit. But I also wouldn't call extra 5% a huge difference.