[danans]

> ...and housing prices are still pretty high in desirable areas.

Isn't that kind of tautological? Prices are always relatively high in desirable areas, and the high relative prices are actually a contributing factor to their desirability. What's more eye-opening is that prices in desirable areas are so high relative to above-average incomes for the area.

[ghaff]

"in desirable areas" basically referred to the fact that housing prices aren't necessarily particularly high in upper Manhattan. But they're pretty high where all the construction is taking place below 110th Street or whatever the appropriate dividing line is.

[danans]

So what you are saying is that there is an enough of an increase of demand attributable to desirability of particular areas (Manhattan below 110th) that new construction does little to bring down high prices.

But without that new construction, those seemingly high prices would be even higher than they are now, unless you assume that the increase in demand is itself a byproduct of the new construction.

[ghaff]

Or housing prices end up at some upper level past which the market won't support. The same sort of effect has been observed with traffic capacity. Add capacity and you get more traffic but, generally speaking, people won't sit in traffic for 6 hours per day.

Obviously there is a correlation between supply and demand but there can also be a demand increases to meet supply effect up to a certain level.

[batbomb]

That's because you've defined area incomes to be incomes for that area, except San Francisco housing is a global market.

[danans]

Sure, it's long painted itself a global city after all, so it's not surprising that the housing market became globalized when it became a major center of economic growth.