Isn't it how every market works?
The incentives here are perverse: the registry knows that changing domain names has a high switching cost; we should not have the "market" dynamics encouraging them to start, effectively, extorting domain owners. "That web presence you built up? It would be a shame if anything were to happen to it…"
I actually thought there were ICANN rules against this sort of thing.
The real estate analogy is good. Find a cheap town!