We have the same problem here in Toronto. There has been a huge expansion in the supply of housing. It is just not housing that people can afford or housing that is too small for families. So oddly there is a need for housing in the midst of a building boom. I know, I know in the Long-Term the market will sort it all out.
[WS:] Actually, it will and in not so long term. Bursting bubbles are precisely that - market corrections of irrational exuberance. For that matter, building booms are also market responses to demand.
Actually, in the area of housing, market is probably the best known distribution mechanism. There are really no other acceptable alternatives. What would you rather have instead of markets - Inheritance? Personal connections? Voting? Bureaucratic fiat? All of these strike me as breeding grounds for nepotism, favoritism, or discrimination.
I sense that your beef is not with the market as distribution mechanism, but with resource availability that places some outside that mechanism, which are two very different things.
Wojtek