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I’m always shocked that people think supply is the issue… People will live in the best place they can afford. This means prices will always be driven by the in

I’m always shocked that people think supply is the issue… People will live in the best place they can afford. This means prices will always be driven by the income level of people in the area. If you suddenly built more housing in SF. You’ll actually just get more people who can afford to live in SF moving there. That’ll drive the prices right back to where they were. Demand would have to drop, while you expand supply. Remove tech jobs from SF and demand will drop, lowering prices. If enough external people don’t wish to move there and you’re building, then prices drop. Effectively, demand always massively outstrips supply for living accommodations As a thought exercise: imagine it was $100/month to live in a 3Bed, 2Br house in Houston. You’d have 100m people want to move there. Keep moving that number up, at some point you’ll get supply and demand meeting. If you add 1000 new houses, it’ll barely impact demand because you’ll have 1000 people willing to move for a $50/month reduction in cost. Then prices will be right back where they started. Unless you can build 10k units or 100k units prices won’t meaningfully change from supply side factors alone.

jandrese 4y ago
I’m not sure I agree with your final conclusion while cities like Flint and Detroit exist.
- caseysoftware 4y ago
  That's simply running the thought experiment the other direction: There are places where you could lower the cost of living to zero and people still wouldn't move there. Alaska effectively goes further by paying people to live there with their Permanent Fund - https://pfd.alaska.gov/ https://pfd.alaska.gov/ - where they give residents an annual dividend based on oil proceeds. But Kansas and other places have done the same offering to pay remote people $10k to move there.
- NegativeLatency 4y ago
  Or European cities with reasonable rent.
endisneigh 4y ago
This is so massively wrong I don't even know where to begin.
- deleted 4y ago
  [deleted]
woodruffw 4y ago
> People will live in the best place they can afford. This is an overly simplified view of demand. People with live in the best place among the places they want to live. That’s why we see strong selection along political and cultural dimensions, even when they correlate weakly (or even negatively) with purchasing power.
aclatuts 4y ago
If it's not a supply-side issue, it should be fine to bulldoze 100k units while everything remains the same, and the prices shouldn't change at all.
- deleted 4y ago
  [deleted]
- lettergram 4y ago
  My point was you can’t build enough units to have the desired impact. If you bulldozed 100k units in SF there would be no where you live. Likely it would drop property values lol
  - lotsofpulp 4y ago
    aclatuts cannot build enough units, but the country of the USA can, because it has a finite number of people in it, and immigration controls.
  - gfaster 4y ago
    If you would like to be proven conclusively wrong, I'd suggest looking at Japan. Its zoning stayed much more liberal than the United States and despite the massive size and growth of Tokyo, it stays affordable. Even in SF, some of the largest housing advocates are the tech companies that don't like having to pay employees enough to live in SF[1]. [1]: https://stripe.com/newsroom/news/stripe-donates-to-california-yimby https://stripe.com/newsroom/news/stripe-donates-to-californi...
thrwy_918 4y ago
There are hundreds of thousands of households in SF. Of course adding a thousand new houses is not going to drastically reduce house prices. That doesn't disprove that it's a supply-side problem. It demonstrates the size of the supply-side problem.
neilparikh 4y ago
> If you suddenly built more housing in SF. You’ll actually just get more people who can afford to live in SF moving there. That’ll drive the prices right back to where they were. Even if we take your theory as true, this still seems net good to me? More people able to live in SF if they want to is a good thing.

jandrese 4y ago

I’m not sure I agree with your final conclusion while cities like Flint and Detroit exist.

caseysoftware 4y ago
That's simply running the thought experiment the other direction: There are places where you could lower the cost of living to zero and people still wouldn't move there. Alaska effectively goes further by paying people to live there with their Permanent Fund - https://pfd.alaska.gov/ https://pfd.alaska.gov/ - where they give residents an annual dividend based on oil proceeds. But Kansas and other places have done the same offering to pay remote people $10k to move there.
NegativeLatency 4y ago
Or European cities with reasonable rent.

endisneigh 4y ago

This is so massively wrong I don't even know where to begin.

deleted 4y ago
[deleted]

woodruffw 4y ago

> People will live in the best place they can afford. This is an overly simplified view of demand. People with live in the best place among the places they want to live. That’s why we see strong selection along political and cultural dimensions, even when they correlate weakly (or even negatively) with purchasing power.

aclatuts 4y ago

If it's not a supply-side issue, it should be fine to bulldoze 100k units while everything remains the same, and the prices shouldn't change at all.

deleted 4y ago
[deleted]
lettergram 4y ago
My point was you can’t build enough units to have the desired impact. If you bulldozed 100k units in SF there would be no where you live. Likely it would drop property values lol
- lotsofpulp 4y ago
  aclatuts cannot build enough units, but the country of the USA can, because it has a finite number of people in it, and immigration controls.
- gfaster 4y ago
  If you would like to be proven conclusively wrong, I'd suggest looking at Japan. Its zoning stayed much more liberal than the United States and despite the massive size and growth of Tokyo, it stays affordable. Even in SF, some of the largest housing advocates are the tech companies that don't like having to pay employees enough to live in SF[1]. [1]: https://stripe.com/newsroom/news/stripe-donates-to-california-yimby https://stripe.com/newsroom/news/stripe-donates-to-californi...

thrwy_918 4y ago

There are hundreds of thousands of households in SF. Of course adding a thousand new houses is not going to drastically reduce house prices. That doesn't disprove that it's a supply-side problem. It demonstrates the size of the supply-side problem.

neilparikh 4y ago

> If you suddenly built more housing in SF. You’ll actually just get more people who can afford to live in SF moving there. That’ll drive the prices right back to where they were. Even if we take your theory as true, this still seems net good to me? More people able to live in SF if they want to is a good thing.