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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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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Rents in Tokyo would disagree. Also, there’s non-monetary benefits to growing the city (as you mention: they’re more desirable to live in)
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Rents in Tokyo are a lot higher than rents in almost every other town in the world. Your second remark is a distraction from my argument (indeed, I noted it as a parenthetical).
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There are other variables, as you know. 30 years of credit expansion, a shift away from the romantic ideal of suburban life, more dual income couples who want to be near their jobs, and extraordinary opportunities for people to aggregate wealth + power in cities like SF & NY.
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Of course. I'm responding merely to a (very simple) argument I often hear.
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It may be false in 20 years if you stop building when supply seems sufficient. A great city naturally tends towards megalopolis. One issue here is that American cities tend to have a single center, and tend to be ringed in by suburbs / unwilling to really grow outwards.
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The bay area, with the same density as the (similarly sized) pearl river delta, would fit something like 80m people; a quarter of the current US population. There are anti-network effects as well though; I think equilibrium would arrive well before this point.
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This could be nice for some simple models in an online notebook. I'm guessing outcomes where wages and prices both increase, vs. surplus mostly going to landlords. First is still bad for some people.
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That describes wealth creation, and seems overall good, unlike the road example. Also, among major cities, what’s the correlation between size and rent? Doesn’t seem that strong.
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