[lindenksv1]

There is no free market in housing. Supply is very tightly constrained by the city via a system of very stringent zoning (3 stories max most of the city, only 3% of the city is even zone for multifamily housing) and taxes. What you see happening in the Bay Area isn't the result of the laws of supply and demand, it's the result of the laws passed by city councils. There's no developer in the world who wouldn't love to build more housing in one of the most booming places in the country. They're not not doing it because it doesn't make financial sense or because there's no demand there. They're not doing it because the housing market in the Bay Area has been regulated to death.