[maxsilver]

> they (politicians) limit the number of new builds,

This theory doesn't work very well, because there are lots of places where new construction is entirely uncapped (politicians are desperate for the new property tax growth), and prices still don't fall there. Prices are lower there than SF/NYC comparables, sure, but still up 300% over the past decade, and still rising every year.

I know everyone takes Econ 101, and then nothing else, but there's a lot more to pricing than just "supply v demand". We have lots of markets with high prices despite adequate supply, or even despite major oversupplies.

> Imagine if it was 'flooded': the diamond market would collapse.

The diamond market was already flooded decades ago (we can literally manufacture diamonds without mining now) and the market still did not collapse.

And of course, the supply price of diamond stones has almost nothing to do with the cost of a diamond ring, which is why Zales can still charge thousands of dollars for a loose diamond stone, that can be infinitely manufactured in lab for less than 1/4th of that price

Prices are almost never supply vs demand. And in a capitalist economy, prices are almost never competitive.

[thrwy_918]

>This theory doesn't work very well, because there are lots of places where new construction is entirely uncapped (politicians are desperate for the new property tax growth), and prices still don't fall there

Can you give an example of such a place?

[thworp]

> the supply price of diamond stones has almost nothing to do with the cost of a diamond ring

Correct. But it does have something to do with the supply of *diamond rings*. Since there is a de-facto cartel between producers, middlemen and retail, it is not easy for new entrants to sell their rings to consumers. So no, there is not an oversupply of real diamond rings that would depress prices. Also, there is a sizeable % of people that want to spend more on a ring, which is quite rare in markets.

Also, I bet that there is a growing ecosystem of individuals and companies producing fake diamond jewellery and selling it direct to consumer (haven't looked into it).

[peyton]

Nobody’s buying property where they think the price will fall. If there’s a cartel keeping prices high, I’d have to be an idiot not to join.

[maxsilver]

> Nobody’s buying property where they think the price will fall.

Regular people do this all the time. Every renter on the planet is "buying property" that will have $0 resale value to them when they leave, for example.

If every house depreciated to exactly $0 upon move out (or even just depreciated at a controlled normal rate, similar to Japan's housing), most regular people would still buy houses. You still have to live somewhere, and plenty of people would prefer to own rather than rent -- even at a zero dollar resale value.

[staunton]

> almost never

Having agreed with everything up to this point, that's a rather bold claim. I would understand it as "supply and demand are not the primary factor in determining almost all prices". Is this really your claim? What are the factors then? Is there evidence?