Sure- in the framing of- all models are wrong, some are useful- that sort of model may even be right, but it would fail to be useful. Fair? I don't disagree in

Sure- in the framing of- all models are wrong, some are useful- that sort of model may even be right, but it would fail to be useful. Fair? I don't disagree in principle with supply and demand, my point was rather that as a model it explains very little about New York City real estate, and if one insists on it as an explanatory tool, one will have to throw out nearly all of the data, which what makes it interesting to study. Various accounting fictions drive a lot of asset pricing. Not fictions in the sense of being false, but rather in the sense of being complicated narratives woven for various purposes that, at the end of the day, are just made up. Real estate is absolutely FULL of these, and they tell a much richer pricing story. Taking the hypothesis of 100x increase in supply- if we are able to poke at that magical occurrence, put it into context, provide some facts and reasoning behind it- we can see circumstances under which it either lowers or raises prices. I mostly see ways in which it raises prices. If the increase in supply was executed by adding to the inventory of one of the monster private owners in NYC- you can be damn sure there would be no sudden drop in pricing of the rest of their inventory, and dollars will go into tuning the machine- tax and reporting rules, interesting ways of structuring new inventory into new assets- so as to allow them to reallocate their ownership in ways that they deemed most advantageous. If the supply increase were executed by magically growing the inventory of city-owned property- you would also probably not see much in the way of price decrease. Why? The city will have the additional burden of maintenance for an enormous new footprint, for water, sewer, public transportation, etc. Huge capital investment would be required, which would require more population, and some sales. But the city will not make that inventory available in any way that would impact prices for other owners. Fund it with debt, keep prices steady, set up special programs to grant the properties, locked in to prevent fast turnover, to new owners who have to move to the city, and look forward to growing flows in the economy in the future. A way in which it might lower prices is if magically ownership of these new properties was distributed among existing renters or small property owners. This is closest to the behavior of an actual market, which describes NYC less and less as more and more of the footprint is held by large interests. But individuals would be forced with a choice of- leave their current space, or shed this new space, both of which would lead to various price depressions. But in the scheme of things, I see this as least likely. Even genies are lazy, and would prefer one large transaction to millions of small ones. Cheers.