3 ms·

You're saying that increasing supply (all else being equal) will increase prices? Seems like that turns standard econ on its head, so can you help me understand

You're saying that increasing supply (all else being equal) will increase prices? Seems like that turns standard econ on its head, so can you help me understand who you reached that conclusion?

cyberax 1y ago
> You're saying that increasing supply (all else being equal) will increase prices? Yep. Exactly. With the caveat: the increase happens by increasing the _density_. > Seems like that turns standard econ on its head, so can you help me understand who you reached that conclusion? Here's another example. Suppose you give a billion dollars to everyone. Will everyone just become rich? Housing is similar. When you build denser housing, it increases the attractiveness of the area for employers. They get access to a larger labor pool, so companies near dense housing are long-term more competitive. This in turn increases the housing price, as workers want to live closer to employers. Rinse, wash, repeat. The end result: no large city managed to lower down housing costs by increasing density. It's a simple verifiable fact. Edit: I checked data for Western Europe, Russia, US, Japan. It's possible that some citi in India or Malaysia managed to do that. But I don't have data for them.
- pcaharrier 1y ago
  I see what you're saying: all else will not remain equal. Your argument is that any increase in supply will always be more than offset by a corresponding increase in demand.
  - cyberax 1y ago
    That is correct. An abstract spherical city in vacuum might be able to lower prices by building more. Or it's possible in a fantasy scenario where you suddenly drop a million housing units onto a city from orbit. But cities don't exist in vacuum. And building new housing is always slow, so you can feasibly grow housing stock in a large city only by single-digit percentages YoY.

3 ms·

You're saying that increasing supply (all else being equal) will increase prices? Seems like that turns standard econ on its head, so can you help me understand

by pcaharrier 1y ago

You're saying that increasing supply (all else being equal) will increase prices? Seems like that turns standard econ on its head, so can you help me understand who you reached that conclusion?

cyberax 1y ago
> You're saying that increasing supply (all else being equal) will increase prices? Yep. Exactly. With the caveat: the increase happens by increasing the _density_. > Seems like that turns standard econ on its head, so can you help me understand who you reached that conclusion? Here's another example. Suppose you give a billion dollars to everyone. Will everyone just become rich? Housing is similar. When you build denser housing, it increases the attractiveness of the area for employers. They get access to a larger labor pool, so companies near dense housing are long-term more competitive. This in turn increases the housing price, as workers want to live closer to employers. Rinse, wash, repeat. The end result: no large city managed to lower down housing costs by increasing density. It's a simple verifiable fact. Edit: I checked data for Western Europe, Russia, US, Japan. It's possible that some citi in India or Malaysia managed to do that. But I don't have data for them.
- pcaharrier 1y ago
  I see what you're saying: all else will not remain equal. Your argument is that any increase in supply will always be more than offset by a corresponding increase in demand.
  - cyberax 1y ago
    That is correct. An abstract spherical city in vacuum might be able to lower prices by building more. Or it's possible in a fantasy scenario where you suddenly drop a million housing units onto a city from orbit. But cities don't exist in vacuum. And building new housing is always slow, so you can feasibly grow housing stock in a large city only by single-digit percentages YoY.