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> There's absolutely zero evidence of "induced demand" for housing. There absolutely is. Here's a great paper studying the effect of removing rent control in

> There's absolutely zero evidence of "induced demand" for housing. There absolutely is. Here's a great paper studying the effect of removing rent control in Cambridge, MA (https://economics.mit.edu/files/9760 https://economics.mit.edu/files/9760) which found that rent in non-rent controlled units went up as a result of the removal. The effect is similar to what GP stated -- gentrification causes a feedback loop that can affect all housing. All said, it is very possible (and I subscribe to the idea) that the Bay Area would not suffer from much induced demand because people are in the area for the economic opportunity, not for local amenities.

tlb 7y ago
The fact that ending rent control increases prices does not support the claim that building more homes increases prices. They should have opposite effects according to basic supply and demand theory.
- usaar333 7y ago
  Ending rent control also should lead to lower prices in non rent controlled housing according to supply and demand. The sequence of events that lead to a rise in prices are similar - that is there is evidence that more affluent people moving in to a local area can result in rents going up for others in that same area.
  - cbHXBY1D 7y ago
    A good example is Jerry Brown's 10K Project — his plan to attract 10,000 people to live in downtown Oakland by 2001, which was the cornerstone of his tenure as mayor. The idea was that 10k affluent people would create a positive feedback loop of gentrification. As someone living in the area in the 90s-2000s, I can say it "worked" but at the expense of the working class as Oakland began gentrifying rapidly by 2010.
  - tlb 7y ago
    Raising the price of one good usually causes the price of substitute goods to go up. For example, if the price of wheat goes up because of import duties, the price of rice will also go up as people switch from wheat to rice. In the rent control example, many people held on to RC apartments because they were a great deal, even though they weren't where they wanted to live. After RC ended, they moved to apartments they preferred (since there was no longer a big price differential), increasing demand (and thus price) for the originally non-RC apartments.

tlb 7y ago

The fact that ending rent control increases prices does not support the claim that building more homes increases prices. They should have opposite effects according to basic supply and demand theory.

usaar333 7y ago
Ending rent control also should lead to lower prices in non rent controlled housing according to supply and demand. The sequence of events that lead to a rise in prices are similar - that is there is evidence that more affluent people moving in to a local area can result in rents going up for others in that same area.
- cbHXBY1D 7y ago
  A good example is Jerry Brown's 10K Project — his plan to attract 10,000 people to live in downtown Oakland by 2001, which was the cornerstone of his tenure as mayor. The idea was that 10k affluent people would create a positive feedback loop of gentrification. As someone living in the area in the 90s-2000s, I can say it "worked" but at the expense of the working class as Oakland began gentrifying rapidly by 2010.
- tlb 7y ago
  Raising the price of one good usually causes the price of substitute goods to go up. For example, if the price of wheat goes up because of import duties, the price of rice will also go up as people switch from wheat to rice. In the rent control example, many people held on to RC apartments because they were a great deal, even though they weren't where they wanted to live. After RC ended, they moved to apartments they preferred (since there was no longer a big price differential), increasing demand (and thus price) for the originally non-RC apartments.