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,

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.