You can have affordable density (Tokyo, Chicago), unaffordable density (Hong Kong, New York), and you can also have affordable sprawl (Houston, Indianapolis), and unaffordable sprawl (Anywhere in coastal california).

Because density and affordability aren't really related. The only thing that really affects affordability are supply and demand. As a proof of this, feel free to peruse the Journal of Housing Economics for empirical housing price models. Almost none of them show density as a significant factor, and almost all of them demonstrate the dominance of one single metric: the vacancy rate. Literally, the vacancy rate is the only thing that matters. And density is only related in the sense that it is one of the possible ways to increase the vacancy rate.

Isn't the vacancy rate simply a (literal) combination of supply and demand? So it being the only factor that matters in pricing seems like a truism, but obviously a lot of factors go into both supply and demand.

Vacancy is largely a function of the relationship between supply and demand curves.

What it also shows is how open to changes a given market is; if there's too much vacancy (think Detroit) then it's clear that something went VERY wrong in the market.

If there's too little vacancy (think SF, Seattle, etc) then what went wrong is mostly NIMBY and regulations failing to pair jobs and housing increases together. The result is a lack of flexibility and skyrocketing prices.

Yes, that’s exactly the point. Only supply and demand matters, density is no more relevant than any of the other factors that influence supply or influence demand. And within the abstract algebraic model of supply and demand, and density only being something that increases demand, increasing density never increases prices. That doesn’t mean that dense areas can’t be expensive; that much is obvious. It merely means that there are other reasons related to supply and demand that made them expensive.

Why are you so certain that none of those component factors could relate to each other in more interesting ways? Why say "it's just supply and demand" when it would be more interesting to look at what drives supply and what drives demand?

Jobs create demand. Jobs bring skilled workers. The presence of skilled workers itself attracts more employers. Maybe the employers move in faster than upzoning happens. Maybe it happens slower. Whether or not this increases or decreases price is just a question of the coefficients on the various inputs. I'd still propose that the missing piece is geographic - cities that can absorb this by growing outward in a decentralized way will stay cheaper than ones that can't, where things get nasty.

But, to move the discussion along, let's just call it demand outrunning growth in supply, dropping the precise role of density (or replacing density in my original post with "geographic constraints which necessitate increased density" or something). Either way the result is the same thing. Do we have ideas that we could try to get turned into policy for stopping this sort of thing from happening? It's a really common pattern, not just in SF but everywhere that's ever seen someone complain about gentrification, so it would be a useful thing to have a politically feasible solution for.

EDIT: it's getting late out here, so I'll add one last bit then probably retire for now. I personally am not a fan of remote work, or cross-timezone collaboration. But I think the people pushing it need to win out in the long run. When it comes to massive density increases, or de-densifying the country by spreading work back out thanks to technology allowing better and better telepresence, I think the latter is far healthier in the end. It de-SPOF-ifies industries, which is good when considering natural disasters, potential climate impacts, or war/terrorism. It levels out costs - you now have the whole country (world?) to choose from - while also massively increasing your hiring pool. It evens out opportunity - you don't have to be able to afford to take a gamble on moving across the country to chase your dream job. It saves a shit-ton when it comes to energy used for commuting.

And if you ask me if a less dense, remote-friendly world is more likely than getting people to reverse course on a hundred-year-old car-powered trend towards suburbanization, I'd wager yes. Especially because the arguments for the latter are pretty unconvincing so far for people who don't want to live somewhere massively denser and who are able to afford their current living situation.

I'd ask that in its reverse formulation too: if density is the answer, why is affordability in the US roughly inversely proportional to density?

Induced demand, or something with a similar effect, seems to apply to housing at least as much as it does to traffic.

And before we dismiss it entirely as "coasts are more desirable than landlocked middle America," let's take a look at both various coastal cities of varying density in California[0] and various less-desirable (Houston is technically coastal, I suppose, but not in the "good weather" or "pleasant" way) Texas[1]. San Diego is cheaper than SF or LA, but also much less dense. Fort Worth is cheaper than Dallas, but also much less dense, and pretty much right next door in the middle of a bunch of flat land.

Maybe we should start knocking down a bunch of non-affordable housing, run off the people with enough money to move away, and watch that affordability go up? ;)

[0 ] https://www.apartmentlist.com/rentonomics/california-rent-re...

[1] https://www.apartmentlist.com/rentonomics/california-rent-re...

You could reach for mysterious counterintuitive induced-demand effects in the housing market. Or you could observe that creating six-figure jobs, recruiting people from around the world, and paying them relocation expenses to come to your city, absolutely does "induce" demand for housing beyond any shadow of doubt 100% of the time.

If Bay Area governments were as NIMBY about desks as they were about beds, we might not be in this mess. Now that we've built the desks, we need the beds to go with them. (Or burn down the desks? The sheer comedic value of a government on an explicit job-destroying program might be worth it).

> if density is the answer, why is affordability in the US roughly inversely proportional to density?

Because affordability is inversely proportional to demand, and higher-demand areas tend to have more dense housing.

Right. And more dense areas draw more business which draws more people which draws more business and also increases price more and more... so density isn't a cure by itself, it's part of the cycle that causes the problem we're trying to fix.

The same way "add another lane to the highway" doesn't fix traffic.

Dense cities are the one weird trick to human civilization itself.

China has seen unbelievably explosive growth in its cities and has also seen 1 billion people lifted out of poverty during exactly the same time period. Coincidence? People flock to cities because they can get paid five times more than they could back in their home village – they're not cavorting, scheming millionaires. Trying to strangle your cities because cities are bad is the dumbest thing you could do in terms of economic growth other than than trying to strangle trade on the theory that those scheming foreigners are going to take all of our money away.

I'm sure downtown Shenzen is more expensive today than it was when it was a small fishing village. Would the world be a better place if it had been kept as a small fishing village?

> other than than trying to strangle trade on the theory that those scheming foreigners are going to take all of our money away.

Wait, you don't think China has been doing this too?

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The US has had decentralized economic booms in the past; even China's current one is based around several cities and regions, and China continues to build outwards, not simply make Beijing and Shanghai ever denser inside the same radius. They do it at a higher density than we do in the US, sure, but other than that the strategy doesn't seem completely unfathomable - I think the Chinese-style answer to the Bay Area is less likely to be "make SF denser" and more "move a bunch of development to the East Bay or Dublin or something and make new companies start up over there."

Expanding on what I said in a separate comment (sigh, I was headed to bed, maybe after this one), we are currently in the US letting many of our cities die while putting a ton of eggs into NYC/SF/etc baskets. I don't think further density in just a few places is going to fix anything price-wise or have any superior outcomes than reducing those bottlenecks would.

The Chinese property bubble makes the USA property bubble look tame in comparison. At least rents are cheap ($1000/month rent is about $1 million to buy). Density doesn’t fix anything if many apartments are speculative investments and not worth the effort of renting out (because rents are low anyways compared to the appreciation).

I don't think this is right. Highways induce demand in a much more immediate way. It takes time for cities to outgrow themselves. And even a very dense city like New York just simply hasn't kept up.

Rents haven't always been as high in NYC as they are now. It's not as though the city's history is one of inducing demand that it can't meet with adequate supply.

The city has always been expensive, but not in the ridiculous way it is today. I'll leave the inflation calculations to you, but this demonstrates my point:

http://www.millersamuel.com/change-is-constant-100-years-of-...

Traffic isn't even close to a good analogy. Because traffic isn't anything but an objectively bad thing.

Sure the same pattern of induced demand may occur with housing development, but induced demand in urban development a bad thing? There is evidence that if actually accommodated that induced demand over the last half century, instead of suppressing it, that our national economic growth would have been 50% higher than it actually was.

http://www.nber.org/papers/w21154

I'm not saying density is a solely bad thing like traffic, I'm suggesting traffic and high prices both are part of feedback loops (traffic is bad :: high rent is bad), and this is exacerbated when in geographically constrained areas. Chicago, Dallas, Atlanta, etc, have unlimited sprawl which helps keep both the traffic and costs down, since the regions can be less centralized. LA, SF, NY do not, and none of them show a good example of "higher density -> lower prices." Instead, the most dense parts of them are the most expensive, fitting the feedback loop model I'm suggesting.

That could very well be because growth in demand has outstripped increase in supply without any sort of feedback relationship, but that itself raises interesting follow-up questions. Is rapid growth undesirable for everyone not directly benefiting from higher salaries from the growth, which is probably most people? Do developers have an incentive to keep growth in supply lagging, since it means they can get a lot more return on investment for what they do raise funds to build? Even for homeowners, your property values go up, but so does everyone else's, so you're not relatively any better off/able to upgrade. What are the political implications of that, if so?

In the past, productivity was not so concentrated in a handful of cities, making me skeptical of that linked model. Big confounding factors there in the death of industries across most of the country happening at the same time as increased global prominence and money concentrating to more and more first-and-second-tier cities.

What that sort of model also misses is that you have at least as many people preferring low density to high density as the reverse (based on empirical trends in the post-car US), and you also have a lot of people who won't be happy with a solution to job distribution that's just "pull up your roots and move to a better city, sorry." It doesn't seem to result in constructive policy recommendations that have a snowball's chance of being welcomed.

I agree entirely. But I think what you'll find underneath a lot of complaints about housing prices is the desire for neighborhoods to remain in exactly whatever state they were in on the day the person you're talking to moved in.

What is the correct density? It's the exact density that existed when I bought in. That's what people -- incumbents, I mean -- are really saying.

Driving a personal car is personally desirable (convenience) even if it is bad for society. The same thing could be said about many housing choices (e.g. single detached home).