Easy. The goal is to build more housing than the market demands so prices fall. If prices go up AND inventory sits vacant rather than reduce prices to rent/sell, then you will prove the plan doesn't work.
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The hard part is that there is a lot of pent up demand for expensive areas at current prices, so *some* more housing won't change the prices much. Growth also induces demand, so even more housing is required to meet that.
But if you build enough, you have to start attracting people who would prefer to live somewhere else at current prices, and so you have to lower prices to do so. At that stage, it's simple supply/demand .
So your plan is for developers to make catastrophic misjudgments of their markets, overbuild, lose money and go out of business (and cause construction workers to lose their jobs and leave the industry).
No. A big part of "YIMBY policies" is to reduce the cost and increase the availability of opportunities so that developers can 1.) do *more* projects and thus need less profit per project to stay solvent overall and 2.) have reduced cost per project so that profit can be maintained at lower prices.
You're right that a big reason for prices being where they are is the prices developers can pencil projects that make sense. Short of direct gov funding, you gotta reduce their costs to make developers do more development.
And the problem is that building with more density only increases land and construction costs. Developers are not going to build more than demand. They aren't going to lose money so people can live somewhere cool. You only get production at volume when prices are *rising*.
You only get production at volume when developers get attractive profit, yes. Falling costs per unit is an alternative way to achieve that though. You're right land gets more expensive, but per unit costs don't scale linearly. It's cheaper per unit to build 100 unit apt than 100 separate homes.
Where is the happening? Building higher increases costs a lot with the biggest leap between 2-7 stories and about linear after that. I've seen an SFR torn down and replaced with 2 townhomes on the same lot each priced more than the SFR!
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