In today’s housing market, you are not the customer.
We discuss who is on this episode of the ZacCast Podcast.
The housing market doesn’t respond to people anymore.
Families are ready to buy. Renters are desperate for options. City councils approve projects. And yet prices don’t come down, supply doesn’t show up where it’s needed, and everyone feels stuck. The problem isn’t confusion or incompetence. It’s something more fundamental.
In today’s housing market, you are not the customer.
What we call the “housing market” is, in practice, a market for financial products. Mortgages are originated, bundled, sliced, traded, and optimized for global capital. Homes are the raw material. The system is doing exactly what it was designed to do: serve investors, manage risk, and maintain price growth.
That’s why the market feels so alienating to households and local leaders. It’s not reacting to what you can afford, what your city needs, or what your neighborhood could absorb. It’s reacting to interest rates, yield spreads, momentum trades, and downside protection.
Once you see that, a lot of popular housing fixes start to look different. Lower interest rates don’t make housing cheaper; they let buyers bid higher. Down-payment assistance doesn’t expand access; it raises the clearing price. Even “build more housing” runs into a wall once prices stop climbing, because capital pulls back the moment appreciation slows. The market isn’t broken; it’s faithfully serving a different set of priorities.
This came through clearly in a recent conversation I had with Chad Janicek and Patrick Lawler on ZachCast, where we kept returning to the same frustration shared by mayors and planners everywhere: Why won’t the market respond when we do things right?
If housing is going to work again as shelter—not just as a financial asset—we have to start by naming the reality we’re in. Until we build systems that respond to local people instead of distant capital, frustration isn’t a failure. It’s the most honest signal the market is sending us.
If readers want to go deeper, the full ZachCast conversation is available as a longer dive.
Well noted.
One more example of how the market is inherently dysfunctional. The list of perverse outcomes of perverse incentives is long.
“We need “systems that respond to local people instead of distant capital.”
“Starting with people and what they want to do”, I’m a 70-year old, low-income retiree. I’m finding my home insurance and essential maintenance costs excessive. I want to find a government agency, affordable housing trust or some other not-for-profit entity to invest in the my home, incrementally, in amounts sufficient to cover insurance and essential maintenance costs. Doing so would not only sustain the affordability of my current housing, but could also preserve the affordability of the home for future homeowners as well.
My housing situation is not unique, and the WE BUY HOUSES vultures know it. Without sufficient funds for essential home insurance and maintenance, many affordable homes get gobbled up by the profit-seekers.
Wouldn’t it be great if a local government agency/Habitat for Humanity-like nonprofit could develop an incremental financing mechanism, not to serve the financial sector, and not to satisfy some mythical “supply and demand” market fundamentalism, but rather, simply to preserve affordable SFHs for young families?
Wouldn’t it be great if low-income retirees could continue to afford to live in their relatively low-cost, fully-paid for homes, while at the same time preserving the affordable homes for future homeowners?
Granted, simply purchasing an existing supply of currently affordable homes does nothing to increase the supply. However, it could stabilize the price of the current supply, and theoretically prevent the supply from either becoming less affordable, or, as in the case of the most recent crash, becoming the target of the cash rich Blackrocks of the world swooping in and converting billions of dollars of owner-occupied SFHs into rental properties.
What’s preventing some government housing agency, affordable housing trust, or other public/nonprofit housing entity from investing in existing affordable housing, incrementally, making payments for insurance and essential maintenance, and thereby, making the housing affordable for current and future residents?