[techiferous]

> Houses cost what people are willing to pay for them. And when people stop paying what is being asked, the price goes down.

I follow that. Is there a delay in the system anywhere, though? For example, does it take a few years for the price correction to happen? Delays can really mess with a system -- leading to oscillations, etc.

[roguecoder]

The inefficiencies are the regulations preventing housing from being built and property taxes from rising. In a free market system, when the price of something goes up so does the supply. Since that can't happen, the market can't adjust.

[kijin]

Even without regulations, it takes a while to physically build a large number of houses and create enough infrastructure around them (roads, parks, schools, shopping, etc.) to make them appealing to consumers. It's not like you can print out entire subdivisions at a moment's notice.

[whatshisface]

Imagine you were selling a house. The absolute upper limit on the delay would be how long it takes for you to come down on the price if there are no buyers (a month at most). If there were other sellers who may have already waited for a while, the delay will be even shorter. Houses are less liquid than stocks so the delay is relevant to some people, but it's much faster than the timescale over which housing shortages play out.

[cpwright]

Or you own the house, but have external factors like your mortgage; or psychological factors like "I don't want to lose money on it." In which case you will pull the house from the market, rather than correcting the price. Or alternatively, not list it in the first place unless you are distressed. Any of these outcomes reduce supply and would cause prices to be stickier.

[harikb]

There is a huge delay in publishing the prices for which houses were sold. In an ideal world, we would really know how many offers were actually in play and what was it sold for the day after it is sold. Access to that information varies and there are lots of insider-trading-like actions done with this information.