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If induced demand in housing was actually a thing, silicon valley wouldn't be overpriced because everybody would pack up and move to Indianapolis, Dallas, or Ho

If induced demand in housing was actually a thing, silicon valley wouldn't be overpriced because everybody would pack up and move to Indianapolis, Dallas, or Houston, where housing is plentiful and nobody is stopping more from being built. The reason prices keep going up when you build more has nothing to do with inducing demand. The demand was already there and already growing, for a million reasons you have no control over. Prices keep going up because you're not building enough. And if you refuse to accommodate or allow growth, you're gonna get displacement. The reason San Francisco has become a displacement nightmare is exactly because of the stupid induced demand myth, that somehow by not accommodating new arrivals that they'll just stop coming. San Francisco's problems are only the fault of people like you who refuse to accept economic reality.

abalone 8y ago
That’s not how induced demand works even in the classic example of traffic congestion. So you’re not really in a position to lecture on “economic reality”. YIMBYs sometimes argue that we can solve the affordability crisis by simply building more market rate housing, because the law of supply and demand dictates it will bring prices down. But that is a simplistic understanding of supply and demand; even in Econ 101 we learn that the price change depends on the demand curve. So what’s the demand curve for housing in SF? Induced demand is the phenomenon where lowering cost motivates people to change their behavior and start using the good. It shifts the curve. This counterintuitively keeps the cost high despite expanding supply. It’s why roads are always congested even after expanding them. There are a lot of tech people in the world who would still like to move to SF. There are speculators too. Like adding lanes to a highway that never gets better, it’s possible that a purely market rate based approach will not result in prices low enough to address the affordable housing crisis for folks who are not making tech industry salaries. YIMBYs as a rule really do not like to admit that. Adding lanes too a highway can help put more people on the road who can tolerate high (opportunity) costs, but you’ve got to look at other solutions too like protected lanes for qualified vehicles. The analogous things in housing would be things like BMR units for qualified residents.
- saosebastiao 8y ago
  You're conflating the demand curve with quantity demanded and the supply curve with quantity supplied. Even in Econ 101 we learn the difference. Induced demand in traffic is also (mostly) a myth. The myth is perpetuated by the same ignorance of another government intervention: artificially low prices. Increasing capacity doesn't reduce congestion because the quantity demanded is so far beyond are ability to supply that it is impractical to meet it at those prices. To illustrate, consider Lamborghinis with prices capped at $1. At that price level, quantity demanded is so high that any increase in quantity supplied is immediately consumed. That doesn't mean that lamborghini is inducing demand by building more cars, because at market rates making more doesn't mean people consume more. And it can be demonstrated perfectly by the countries that do price their roads correctly: when they build more roads, it actually does reduce congestion. Adding more supply doesn't change the demand curve, it changes the equilibrium price. In all cases, supplying more means more is consumed. That doesn't mean demand curve has shifted, it means the quantity demanded has changed to reflect the new equilibrium. The price still drops, even with a higher quantity demanded. That is not induced demand, that's the same fucking supply and demand curve doing exactly what it always has done. Induced demand is where the demand curve changes in response to a change in quantity supplied. You have no evidence that that is happening, because it isn't, regardless of whether it is in Silicon Valley or Indianapolis. Demand curves for housing are largely the result of income factors: people can make more money in SV. If SV companies keep paying workers more and more, the demand curve is going to keep shifting. It's not caused by housing growth, that's idiotic. And because the demand shift is not caused by housing, restricting housing only makes it worse.

abalone 8y ago

That’s not how induced demand works even in the classic example of traffic congestion. So you’re not really in a position to lecture on “economic reality”. YIMBYs sometimes argue that we can solve the affordability crisis by simply building more market rate housing, because the law of supply and demand dictates it will bring prices down. But that is a simplistic understanding of supply and demand; even in Econ 101 we learn that the price change depends on the demand curve. So what’s the demand curve for housing in SF? Induced demand is the phenomenon where lowering cost motivates people to change their behavior and start using the good. It shifts the curve. This counterintuitively keeps the cost high despite expanding supply. It’s why roads are always congested even after expanding them. There are a lot of tech people in the world who would still like to move to SF. There are speculators too. Like adding lanes to a highway that never gets better, it’s possible that a purely market rate based approach will not result in prices low enough to address the affordable housing crisis for folks who are not making tech industry salaries. YIMBYs as a rule really do not like to admit that. Adding lanes too a highway can help put more people on the road who can tolerate high (opportunity) costs, but you’ve got to look at other solutions too like protected lanes for qualified vehicles. The analogous things in housing would be things like BMR units for qualified residents.

saosebastiao 8y ago
You're conflating the demand curve with quantity demanded and the supply curve with quantity supplied. Even in Econ 101 we learn the difference. Induced demand in traffic is also (mostly) a myth. The myth is perpetuated by the same ignorance of another government intervention: artificially low prices. Increasing capacity doesn't reduce congestion because the quantity demanded is so far beyond are ability to supply that it is impractical to meet it at those prices. To illustrate, consider Lamborghinis with prices capped at $1. At that price level, quantity demanded is so high that any increase in quantity supplied is immediately consumed. That doesn't mean that lamborghini is inducing demand by building more cars, because at market rates making more doesn't mean people consume more. And it can be demonstrated perfectly by the countries that do price their roads correctly: when they build more roads, it actually does reduce congestion. Adding more supply doesn't change the demand curve, it changes the equilibrium price. In all cases, supplying more means more is consumed. That doesn't mean demand curve has shifted, it means the quantity demanded has changed to reflect the new equilibrium. The price still drops, even with a higher quantity demanded. That is not induced demand, that's the same fucking supply and demand curve doing exactly what it always has done. Induced demand is where the demand curve changes in response to a change in quantity supplied. You have no evidence that that is happening, because it isn't, regardless of whether it is in Silicon Valley or Indianapolis. Demand curves for housing are largely the result of income factors: people can make more money in SV. If SV companies keep paying workers more and more, the demand curve is going to keep shifting. It's not caused by housing growth, that's idiotic. And because the demand shift is not caused by housing, restricting housing only makes it worse.