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Oh, so the vaunted religion of the "free market" doesn't solve all of society's ills? It creates social ills? Say it ain't so! People have been saying this fo

Oh, so the vaunted religion of the "free market" doesn't solve all of society's ills? It creates social ills? Say it ain't so! People have been saying this for next to forever and their concerns are always pooh-pooh'ed. Seriously, if the free market doesn't work for the housing market, one of the most transparent and elastic markets that exist, then what does it work for? I find it hard to believe Americans are seriously proposing limiting the property one can buy. After all, "Wall Street" is a useful fiction - at the end of the day it's just people.

danaris 3y ago
First of all, I want to be clear that I completely agree that the "free market" doesn't work. It doesn't work because it's a thought experiment—an abstraction, like the infamous "spherical cow in a vacuum". ...But to refer to the housing market as "elastic" just strikes me as patently absurd. Unless I'm deeply misunderstanding what you're referring to, elasticity requires that the product be fungible and the demand be non-urgent. Every single person needs a place to live, which means that in many, many cases, the demand is extremely urgent. Furthermore, a house in Houston is not at all interchangeable with a house in Wink, TX (a random town an hour west of Odessa I just picked out on a map). Even two dwellings of comparable price within the same city may not be at all interchangeable due to different locations, amenities, etc. All of this just goes, however, to prove your broader point: that the free market doesn't work, because there isn't one.
- taylodl 3y ago
  You're correct. The housing market is transparent, but it's mostly inelastic. Which is actually a more important point: the free market doesn't even work in theory in inelastic markets. Oh well. I guess the beatings will continue until morale improves.
HDThoreaun 3y ago
The reason these houses are being bought is the exclusionary zoning which makes it impossible to build new ones. The housing market is not free, the government has set up extremely onerous regulations to ensure that housing always increases in value, of course investors will see that and want in. The solution here is obvious, stop writing zoning laws that ensure housing always gets more expensive.

danaris 3y ago

First of all, I want to be clear that I completely agree that the "free market" doesn't work. It doesn't work because it's a thought experiment—an abstraction, like the infamous "spherical cow in a vacuum". ...But to refer to the housing market as "elastic" just strikes me as patently absurd. Unless I'm deeply misunderstanding what you're referring to, elasticity requires that the product be fungible and the demand be non-urgent. Every single person needs a place to live, which means that in many, many cases, the demand is extremely urgent. Furthermore, a house in Houston is not at all interchangeable with a house in Wink, TX (a random town an hour west of Odessa I just picked out on a map). Even two dwellings of comparable price within the same city may not be at all interchangeable due to different locations, amenities, etc. All of this just goes, however, to prove your broader point: that the free market doesn't work, because there isn't one.

taylodl 3y ago
You're correct. The housing market is transparent, but it's mostly inelastic. Which is actually a more important point: the free market doesn't even work in theory in inelastic markets. Oh well. I guess the beatings will continue until morale improves.

HDThoreaun 3y ago

The reason these houses are being bought is the exclusionary zoning which makes it impossible to build new ones. The housing market is not free, the government has set up extremely onerous regulations to ensure that housing always increases in value, of course investors will see that and want in. The solution here is obvious, stop writing zoning laws that ensure housing always gets more expensive.