[throwaway34241]

I'm not sure exactly what you are looking for to be convinced but I'll try.

First of all, for example in the Bay Area there are more people who would like to live there than there are houses, and so the people with more money bid up the price and "win" the house, while the people with less money are priced out and must live elsewhere. Hopefully you agree with this basic premise?

With this model, if there is one less house, one more person will be priced out, and if there is one more house, one less person will be priced out, since the number of houses determine how many winners there will be (and as long as people don't change their minds about wanting to live there if they could afford it).

I've heard people worry about "induced demand", and I agree it's true that there's probably many people that would consider moving to San Francisco from elsewhere if the price started coming down (and of course vice versa), and that that would prevent the price from lowering too quickly. But those people moving free up housing in Austin, Seattle, etc, and there are more "winners" overall.

I think a lot of the people "on the margins" of being priced out in the Bay Area are not on the edge of homelessness - often they are able to move and drive up demand elsewhere. But I do see more and more people living out of RVs and vehicles parked near freeways.

For the price increases over the last couple decades, I think the demand has gone up for most first world cities. I think this is mostly because the industries that are booming are mostly knowledge work, that tends to have a higher specialization of labor so is more naturally located in places with higher population densities that have more liquid job markets (in addition to network effects within certain industries). I think the solution to this is to build more housing in cities but the alternative is lower income workers/industries are displaced and landowners are enriched.

For a specific example of this theory working, Tokyo is subject to a lot of the same economic forces as other first world cities that drive demand up (wrt labor specialization etc). They've managed to keep housing under control, but in order to achieve that they've had to allow almost double the amount of new housing as all of California (despite Tokyo having only around 1/3 the population) [1].

[1] https://www.vox.com/2016/8/8/12390048/san-francisco-housing-...

[exterrestrial]

Citing Japan only further proves my point. Property values don’t appreciate the same in Japan because, and one reason is that they don’t have a finance industry that allows them to. Land owners cannot get rich by mere property appreciation like they can here. I definitely think we should imitate Japan more, but this isn’t simply a matter of “allowing more housing”. Acting like that’s all there is to it is disingenuous.

[throwaway34241]

Japan does real estate development with banks and loans like the US does, and interest rates are even lower so it's easier to borrow a large sum of money. Can you explain what you meant about the finance industry not allowing prices to appreciate?

Their zoning is where they have obvious huge differences. The zoning categories are set at a national level and limit how restrictive local cities can be (there's 12 categories based on nuisance level). The higher zoning usually allows lower density also, so cities just start with a little extra zoning headroom that allows them to grow over time. They also automatically permit things that follow zoning. [1]

In the US zoning is more local, often there are many more zone types that are much more restrictive about what they allow (it's more micromanaged and often prohibits things like mixed-use in addition to multi family). In many of the biggest markets even projects that follow zoning are usually not allowed, every project is an individual years long fight. Also in cities like Los Angeles the zoned-for capacity has actually dramatically decreased over time, even as the population grew. [2]

Some of these policies may be a legacy of people deliberately not wanting it to be too affordable, because neighborhoods didn't want low-income people to move in. Of course now in many places even middle-income people can't afford it.

I think, from a social justice perspective, the US policy has been an abject failure. It's increased pollution (from long commutes) and homelessness. It's deprived people of good paying jobs, since they can't afford to move to the locations where they're available. It's squeezed the middle class and enriched landlords, there's even debate that housing may be the most important contributor to wealth inequality. It's anti-environment since higher density has less environmental impact on a per-capita basis. I'm sure there's some upsides, but I can't see any that remotely justify the long-term costs that these policies have brought about.

[1] https://marketurbanism.com/2019/03/19/why-is-japanese-zoning...

[2] https://www.salon.com/test/2015/04/05/the_incredible_shrinki..., graph at: https://www.austincontrarian.com/.a/6a00d8341d04dc53ef01b8d2...