chat

Within the liberal economic orthodoxy there's a belief that there's an equilibrium point where "social utility" is maximized where businesses arrive at a point where they can neither increase nor decrease costs nor increase nor decrease the supply without losing profit, and their models tend to put that point at a much higher supply than it actually arrives at in reality. This is because increasing supply is not a fixed cost: while economies of scale exist, they're also limited by other material factors such as availability of resources, availability of land, and availability of labor. The models do take this into account, but neglect to consider that even in a competitive market this is still a material barrier to just scaling up production indefinitely.

With housing this is further limited by the fact that housing has to go somewhere, and then that space is indefinitely used by it. It actively consumes and occupies land in an area, and because of this tends to appreciate in value once it exists. So you end up with multiple barriers to just increasing supply with market forces: land becomes increasingly expensive the more of it gets used and becomes unavailable and the more nearby land becomes valuable, housing that exists can be rented or just kept vacant and either way passively makes the owner money over time (albeit in the latter case it doesn't make a liquid profit until sold or utilized, but it would still be considered a valuable asset and form of wealth that increases year over year), and housing can be moved at basically any price to not just people who will use it as housing but to profiteers looking to rent or flip it.

This isn't something being churned out of an assembly line, but a massive hoard of wealth that maximizes its owners' profits when they limit its supply and availability.

Also market prices are fundamentally irrational, not actually dictated by idealistic supply and demand curves, and just as much dictated by companies going "lol, lmao, pay this" as they are by some sort of utile balancing by the end consumer.