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> Because "supply and demand" is a lot like "correlation does not equal causation" in the lexicon of internet debate: most people are parroting something they h

> Because "supply and demand" is a lot like "correlation does not equal causation" in the lexicon of internet debate: most people are parroting something they heard once but don't quite understand. While I admire your attempt to recycle the "refute a commonly used argument on the basis of its commonality" strategy, that simply doesn't cut it when you're making fallacious claims. While you can try making dubious arguments regarding economics, you can't hand-wave away the fact that buildings in SF can be much taller than they currently are while adhering to safety codes for a seismically active region. > The econ-101 supply/demand curve requires a perfectly competitive market for a homogenous product -- neither of these applies to the SF housing market. Which "econ-101 supply/demand curve" are you referring to, exactly? I hope you're not referring to the perfect competition supply/demand curve, because that's irrelevant here. Price is influenced by supply even if competition isn't perfect.

timr 13y ago
"I hope you're not referring to the perfect competition supply/demand curve, because that's irrelevant here." No kidding. That's exactly what I said: homes aren't commodities, the market isn't anywhere near "perfectly competitive", the demand is inelastic, and the supply is primarily constrained by the availability of land. Thus "building skyscrapers" is not an axiomatic solution to any of this: it costs more to build upward, which exacerbates the non-commodity nature of the good; landowners have even more competitive power in the market; availability is still constrained by an extremely limited natural resource (land). What happens is that prices go up, landowners build upward until prices stagnate, then landowners stop building. When prices go up again, landowners build upward again. All building happens in response to rising prices, so it's never a force for downward pressure on prices unless demand declines unexpectedly.
- w1ntermute 13y ago
  > demand is inelastic There you go again, making fallacious claims. Demand for housing is definitely not inelastic. > What happens is that prices go up, landowners build upward until prices stagnate, then landowners stop building. Wrong again, landowners will build upwards until the cost of building upwards outweighs the gains in terms of expected rent. There is no reason the rent couldn't decrease and still result in a net increase in profit for the landowner. After all, you would be renting out more units on the same land.

timr 13y ago

"I hope you're not referring to the perfect competition supply/demand curve, because that's irrelevant here." No kidding. That's exactly what I said: homes aren't commodities, the market isn't anywhere near "perfectly competitive", the demand is inelastic, and the supply is primarily constrained by the availability of land. Thus "building skyscrapers" is not an axiomatic solution to any of this: it costs more to build upward, which exacerbates the non-commodity nature of the good; landowners have even more competitive power in the market; availability is still constrained by an extremely limited natural resource (land). What happens is that prices go up, landowners build upward until prices stagnate, then landowners stop building. When prices go up again, landowners build upward again. All building happens in response to rising prices, so it's never a force for downward pressure on prices unless demand declines unexpectedly.

w1ntermute 13y ago
> demand is inelastic There you go again, making fallacious claims. Demand for housing is definitely not inelastic. > What happens is that prices go up, landowners build upward until prices stagnate, then landowners stop building. Wrong again, landowners will build upwards until the cost of building upwards outweighs the gains in terms of expected rent. There is no reason the rent couldn't decrease and still result in a net increase in profit for the landowner. After all, you would be renting out more units on the same land.