Yes, something like this will happen in and close to SF, like till Palo Alto may be. But if you allow building high rise apartments, places far enough from SF w

Yes, something like this will happen in and close to SF, like till Palo Alto may be. But if you allow building high rise apartments, places far enough from SF will see a good fall in prices. Then you can build fast enough in those places given the demand for homes at those prices. Beyond all this once its clear that you can get decent accommodation for $300K, spending $1.5 million for the same becomes stupid. Sure people will buy McMansions and homes in cul-de-sac as a badge of prestige. But anybody with a brain, and knows that money is better spent on saving up for retirement will look the other way go stay in the $300K flat. You would stay in the same if you rented, anyway.