They do though. It's just that there's so much regulation and other problems that they can't adjust fast enough. I've lived in Hamburg, Germany, adjacent to an

They do though. It's just that there's so much regulation and other problems that they can't adjust fast enough. I've lived in Hamburg, Germany, adjacent to an expanding hipster area. Rents rose steadily and every vacant lot was being built upon, industrial zones were repurposed for more housing etc. It's just that that still only gives you a fraction of the apartments you'd need to satisfy demand. If there was no incentive for investment, I'm sure we'd see even fewer new houses being built, because there's no incentive for the state to move, neither fast nor at all.