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It seems like a conundrum for us conservatives.

We conservatives believe in free markets, and the housing market has evolved to where both rents and housing prices have escalated beyond the reach of many people. Yet if this is the free market in action , what can we conservatives say about that if it’s truly a free market phenomenon?

Yes, it is quite a bit of a conundrum. That is why I don’t see any easy fix especially right now because the market has been distorted further by interest rates, appreciation, and property taxes. If you are in a home you’ve held for more than a few years you have a low interest rate and, at least here in CA, your property tax assessment valuation is set at your purchase price. With home prices up 30-40% just in the last few years, that’s a lot of extra property tax for new home buyers.

If you want to change houses, you take on a higher rate and a higher tax assessment - so you aren’t likely to move. If you don’t move, that means fewer homes on the market for would be buyers. And of course would be buyers will end up paying $1000s more a month in interest expenses and, depending on the area, maybe $18,000-$40,000 a year just in property taxes (much more for the mansions of course, these are just your typical city homes). The lack of supply of homes is a distortion of the market caused at least in part by property taxes, interest rates and costs to build - plus the rush into properties between 2009-2019 when housing prices crashed and interest rates were low.

There is no easy fix without major reform or some kind of major economic disaster. If we want to hold our belief in the free market then the only place to get reform is relief from government intrusion. Lower or eliminate property taxes for single entity owners and force a max cost and time limit for permitting and inspections to speed up construction. There are more draconian solutions, such as penalizing ownership of multiple dwellings with escalating property taxes for each additional property held by an entity (to be defined by ownership interest in the entity) - but going that route we get ever less free market oriented and more intrusive government. But disincentivizing “property magnates” could have the effect of creating more supply which in theory would result in lower prices.