The simple model of the market -- that supply and demand will balance and establish a price -- is a first-order approximation. It's often very efficient. But e

The simple model of the market -- that supply and demand will balance and establish a price -- is a first-order approximation. It's often very efficient. But externalities and market-failures are always lurking, and sometimes they're dominant, and they can mess up the balance even in the long term. In this case you might think that someone could buy some land+materials+labor in order to create-and-sell shelter. And that eventually the cost of shelter would be comparable to the cost of those inputs. And that works in a lot of places where housing is relatively affordable. But is that mechanism really setting the prices in San Francisco? And if not, what is causing the imbalance? How is the market being constrained and distorted? To whose benefit?