How the Housing Market Was Rigged (And Why It Won’t Fix Itself)
(Part 1)
By Devin M. Jameson
Something strange is happening in the housing market.
Millennials and Gen Z are feeling it the most, but no generation is immune.
Prices are sky-high. Construction lags. Inventory is scarce.
Interest rates have soared—yet home values remain inflated.
For years, we’ve been told that markets self-correct. That when prices rise too
far, innovation kicks in. New builders emerge, smarter solutions are adopted,
and balance is restored.
But that’s not happening.
Why?
Because this isn’t a broken system.
It’s a manipulated one.
Artificial Scarcity and Investor Control
Over the past decade, investors and financial firms have
quietly gobbled up homes—not to flip them, but to hold them, rent them, and
squeeze every drop of profit from them. In some areas, entire neighborhoods are
now owned by people who don’t live there, don’t contribute locally, and don’t
care who gets priced out.
These homes are deliberately kept out of reach.
Not because no one wants them—but because scarcity drives profit.
At the same time, cities and counties—often influenced by
these same interests—block real development. Zoning laws choke off high-density
housing. Neighborhood associations fight anything new. Even innovative
construction methods like modular or 3D-printed homes get sidelined—not because
they don’t work, but because they threaten the status quo.
And it gets murkier. Many of the same financial players
profiting from high housing prices also hold stakes across the entire
housing ecosystem.
They sit on boards or control investments tied to real estate developers,
construction firms, and the companies that price out lumber, drywall, paint,
and more.
Some even hold stock in major retailers and
wholesalers—companies that set the cost of 2x4s, nails, and roofing tar. During
recent supply chain disruptions, reports surfaced of material hoarding and
strategic price hikes that sent costs soaring and slowed building to a
crawl.
When the same players influence both the supply of homes
and the cost of building them, we have to ask:
Is this a market… or a monopoly in disguise?
If more homes are built and prices drop, volume may rise—but
profit per unit shrinks.
But if construction stays slow, land stays restricted, and materials stay
tight?
They win—without doing anything new.
They don’t need more homes.
They just need each one to cost more.
This isn’t a grand conspiracy.
It’s just a system perfectly designed to serve profit—not people.
Scarcity isn’t a bug. It’s the business model.
And that model is simple:
Keep prices high. Force people to pay up. Or push them out until they pay.
The Interest Rate Paradox
Normally, when interest rates rise, home prices fall.
Higher borrowing costs are supposed to cool demand and ease prices.
But that’s not what’s happening.
Millions of homeowners are locked into ultra-low mortgage
rates from the past decade. Now that rates are more than double what they were,
they’re not selling. Why would they?
Trading a 3% loan for a 7% one is financial suicide.
Listings vanish. Turnover stops. Supply dries up.
- No
one’s buying.
- No
one’s selling.
- But
prices? Still stubbornly high.
It’s the worst of both worlds—unless you’re an all-cash
buyer.
While rising interest rates slam the door on ordinary
families, they don’t touch the ultra-wealthy.
Institutional investors and cash buyers are immune to rate hikes.
While working families struggle to qualify for a mortgage,
investors swoop in with all-cash offers—often outbidding people who actually
want to live in the home.
And for those barely scraping by? It’s even worse.
While all-cash buyers sit on capital, many average
homeowners are walking a financial tightrope—overstretched from the
overpriced market, or now being crushed by rising property taxes and insurance.
One emergency—one medical bill, job loss, or unexpected
repair—and they’re forced to sell. Sometimes at a loss.
That’s when the cash offer comes in.
No contingencies. No delays. Just a check and a title
transfer.
And just like that, another home disappears into the rental empire.
So even as traditional demand drops, prices stay
high—because the buyer pool is no longer families.
It’s corporate capital.
Combine that with frozen turnover and tight inventory?
You don’t get a correction.
You get a stranglehold.
And low mortgage rates from the past decade are helping fuel it.
A Crisis With No Consequences: The Shadow of 2008
To understand today’s housing mess, we have to go back.
In 2008, the market collapsed under the weight of
speculation, subprime lending, and financial trickery.
The ultra-wealthy—banks, hedge funds, mortgage giants—gambled with people’s
homes like poker chips.
And when their bets failed?
The public paid.
Trillions in bailouts. Millions of homes lost. Retirements
destroyed. Neighborhoods gutted.
But Wall Street?
It got rescued.
Out of all the people who helped create that crisis, only one
person went to jail.
That sent a message:
“Go ahead and gamble. We’ve got your back.”
- If
your risky bets pay off? You get rich.
- If
they blow up? The government steps in.
- Heads,
you win. Tails, everyone else loses.
That’s not capitalism.
That’s a rigged casino.
And that precedent created the system we live in now.
Why worry about bubbles when you know you’ll be bailed out?
Why care about long-term risk when there’s no accountability?
This is why the housing market doesn’t correct itself
anymore.
Because the people at the top don’t believe in risk.
They believe in rescue.
A Final Thought: Even Adam Smith Would Be Appalled
Adam Smith, the father of modern capitalism, believed in free
markets guided by moral restraint.
He saw self-interest as a force that, if checked by ethics and real
competition, could benefit everyone.
But Smith also warned against collusion, price-fixing,
and corporate power working against the public. He believed merchants
should be treated with suspicion—and their proposals viewed with caution.
So what would he say today—watching a system where the rich
privatize gains, socialize losses, and treat housing as an asset to hoard
instead of a need to fill?
Smith believed a healthy society was impossible when the
majority lived in poverty.
He believed markets were meant to serve people—not exploit them.
What we have now isn’t capitalism.
It’s a twisted mutation. It’s crony capitalism.
And even Adam Smith would be disgusted by what it’s become.
And That’s the Real Crisis
We don’t have a housing shortage.
We have a glutton of people hoarding homes for profit.
We don’t have a market failure.
We have a morality failure—a system that rewards manipulation, punishes
risk-takers who play fair, and locks out anyone without capital.
We have the land.
We have the resources.
We have the technology.
But we lack the will—because too many people are benefitting from the way things are and too many people scared to let the system actually change.
If we want real change, we don’t just need to build more
homes.
We need to rebuild the system—from the ground up.
Because a society that treats housing as a commodity first
and a necessity second isn’t just unfair.
It’s broken.
And it’s time we started saying so.
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