Eh I see your point but I disagree. Look for housing in a highly competitive city, and soon enough you stop caring about geographical specifics and instead look for some combination of useful attributes. In practice, that's fungibility.
This whole thread is filled with similarly absurd statements like this one. That is not “fungibility” at all, not in practice, not in the slightest.
Fungibility is the absolute incontrovertible likeness of two separate units to the point where they are entirely interchangeable across all parties in the economy.
US dollar bills are fungible. Even BTC are not entirely fungible anymore. Houses are not even remotely fungible.
Just because you're willing to accept a wide range of houses does not make them fungible. Each house is unique and each home buyer has different priorities.
That's why houses a priced individually. When you go to the grocery store, they don't individually price each cob of corn. There might be two different buckets with a differentiator (organic vs non organic), but within the bucket each cob is fungible. It doesn't matter which one you grab.
