And since enough of them have $40k+ SUVs and “crossovers”, those become the norm for middle class families who really would have been just fine with small station wagons (if those were actually available in the US market)
The best way to escape this cycle is to only buy the car you can pay for up front (even if you then take a loan because the interest rate appears to be in your favor). Do this enough times, and you’ll be ok with plonking down the cash for a $15-20k carefully-researched, moderately-used vehicle with a warranty, but be horrified by the very thought of that $600+ 5-7 year loan so many of your colleagues accept as normal.
It's the same with homes. But as you say, at least real estate tends to hold it's value somewhat.
Expensive land usually does appreciate (in some areas, only until interest rates go up?), but the house on the land is a money pit.
I'm not here to pass moral judgments on this method of creating wealth, although to me unnecessary mineral extraction for energy is largely fraught with moral hazard. But to say that real estate isn't an investment is to consider the past two centuries of American economic growth to be a temporary aberration, and I don't think you can do that in light of the degree of economic reliance that has grown up around it.
You can just show up and buy the thing and use your skills to improve the thing, which improves everything else around it.
There is enormous financial leverage if you can do that, because most people aren't willing to put in the work.
If you mostly use your car for a ten minute drive to work, but twice a year need to drive several thousand kilometers, it may be tempting to optimize for the latter (in terms of size, comfort, velocity), whilst it may be cheaper overall to optimize for the former and hire a vehicle for the latter.
Of course not everyone takes long holidays (several months) touring so their constraints would be different and satisfiable with different solutions.