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).
Because affordability is inversely proportional to demand, and higher-demand areas tend to have more dense housing.
The same way "add another lane to the highway" doesn't fix traffic.
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?
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.
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-...
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.
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.
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.
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...