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> here is a huge demand so prices will still rise well above those prices. That is not supply and demand works, price will fall. It might pick up again due to

> here is a huge demand so prices will still rise well above those prices. That is not supply and demand works, price will fall. It might pick up again due to increased economical activity driven by population growth, but that is a second order concern. At some point housing itself will not be a limiting factor to the growth of the economy, however SF is far being Manhattan, London, Paris.. It might take 10 years to get there. Once SF increases its population by 7-8x a simple investment in underground metro would undo the effect of congestion. That is where technology is right now, Greater Tokyo supports 40 million people ! and the city is an economical powerhouse. It allows cool stuff like trains that travel at the speed of a bullet.

bcheung 10y ago
I should have clarified. Yes, increasing supply satisfies some demand and brings down prices. My point was that demand is so much higher than supply that the market value is still much higher than the intrinsic value. Saying you can build a home for $50K doesn't mean it will cost that. Regulatory concerns are a large part why homes so much more expensive. I built a 2 story, 4 room structure inside of a friend's warehouse for $3,800 total. I got a book on framing and just bought a bunch of lumber and drywall from Home Depot and built it myself with the help of a friend. It wasn't legal of course. If I actually followed the law I couldn't have afforded a place to live and would have been homeless. I agree that technology follows an exponential curve and will bring construction costs down, but gov't and society in general doesn't move at that speed and so I don't anticipate homes being much cheaper. That and inflation.
OJFord 10y ago
> That is not supply and demand works, price will fall. Below its existing point, but well above the stated $50K.

bcheung 10y ago

I should have clarified. Yes, increasing supply satisfies some demand and brings down prices. My point was that demand is so much higher than supply that the market value is still much higher than the intrinsic value. Saying you can build a home for $50K doesn't mean it will cost that. Regulatory concerns are a large part why homes so much more expensive. I built a 2 story, 4 room structure inside of a friend's warehouse for $3,800 total. I got a book on framing and just bought a bunch of lumber and drywall from Home Depot and built it myself with the help of a friend. It wasn't legal of course. If I actually followed the law I couldn't have afforded a place to live and would have been homeless. I agree that technology follows an exponential curve and will bring construction costs down, but gov't and society in general doesn't move at that speed and so I don't anticipate homes being much cheaper. That and inflation.

OJFord 10y ago

> That is not supply and demand works, price will fall. Below its existing point, but well above the stated $50K.