This is true in many areas (California), but not in others. There are ghost residential areas in many countries. In 2004 in Spain 675.000 house starts - more th

This is true in many areas (California), but not in others. There are ghost residential areas in many countries. In 2004 in Spain 675.000 house starts - more than UK, Germany and France combined (45 millions citizens in Spain vs 80+65+65). There were not unsurmountable government restrictions (obviously). There was no real demand for it. The housing demand was largely speculative, people investing in houses because "prices never go down". Often, they didn't even get rented - why bother, if the valuation of your "investment" grows faster than what you can get from rent? In markets like these, huge increases in supply don't drive the prices down. Hoarding, speculation and housing flipping absorb everything that gets built. We still have insanely high housing prices today.