Many people in the Bay Area argue that NIMBYs ignore the basic economics of supply and demand. Build more housing, they argue, and prices will inevitably drop.
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In the very near term, this seems right. Over the long run, I'm genuinely uncertain whether to believe this.
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In Braess's paradox, increasing the capacity of a road to carry traffic may actually lead to more congestion, since more people will want to use it: https://en.wikipedia.org/wiki/Braess%27s_paradox …
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What bothers me is that generally speaking the biggest cities (a) have the largest supply of housing; and (b) have the highest prices, because being big makes them so attractive. So a large supply is actually anti-correlated with low prices.
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So while I believe the supply-and-demand argument over, say, a 1-year timescale, I wonder if it's false over 20 years. Make housing a lot easier to build, SF will become a much bigger city, and prices may go up even more.
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A counter-argument would be to say something like: what's needed is to ensure a permanent structural increase in the _fraction_ of the city's housing stock that is available.
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That argument seems pretty good to me (though, as with the first argument, I'm also not sure of it). But it's not the argument I often hear from the NIMBYs-are-ignorant-of-economics people.
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If you are right, and with oodles more housing prices stay high, doesn't it imply that the societal NPV of new housing here is enormous?
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Yes (I make that point later in the thread).
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It seems like it should be possible to build enough housing so that a city's so crowded no one wants to live there anymore, to paraphrase Yogi Berra. We just never get anywhere close to that point.
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To the extent it’s true, might it be a collective action problem? It beggars belief that (without unprecedented immigration) you can increase supply in SF, NY, LA, Boston, DC, etc while keeping prices up.
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I’d also vaguely gesture at evidence many Sunbelt cities have grown a lot but prices are still relatively low.
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