Yeah, zoning in the US tends to be single use, which prevents most buildings from being built in most places. I recently read a fantastic blog post on how zoning works in Japan, where uses are instead ranked by how much of a "nuisance" they are, and zones have a maximum nuisance level. Anything at or below that level can be constructed in that zone.
http://devonzuegel.com/post/north-american-vs-japanese-zonin...
What is preventing companies from moving to less expensive cities? By the free market logic, it should decrease demand/rent in hot cities, and provide these companies more affordable workers.
At which point is the housing pressure strong enough so that jobs start moving elsewhere, and market effects between cities or state come into play (i.e. if a city "choose" to limit housing it will limit it's economic potential compared to others)?
Those cities also have the same restrictive zoning laws, preventing new office buildings and housing just like the expensive cities.
Many American cities are experiencing price increases out of line with prevailing wages to the point that the median income cannot afford the median house. And we're not talking NYC and SF;think Nashville.
Furthermore, talent is concentrated in a few areas. A software firm in Nome, Alaska will have a harder time hiring than one in New York. Infrastructure like airports keeps businesses in hubs. Ports make goods cheap to ship. Having large numbers of local customers helps too
In Silicon Valley the dynamic is different, because it’s mostly global headquarters full of upper management and highly paid engineers. Unlike low-wage employees in regional offices, those people are not considered disposable, and aren’t willing to relocate on a whim. So relocating headquarters to another city or state is extremely hard for large companies.
Source: I rent in one of these atrocities.
The real issue with NIMBYs is how restrictive zoning is. Sure, you can build anything you want if it conforms, but good luck getting it to conform. For example, single-family home neighborhoods are pretty much stuck that way. Want a nice, compact apartment building? Or maybe even a fourplex? Good luck. In my reasonably-sized college town, upzoning happens once PER DECADE.
This is the affordable housing crisis at its core, and it’s remarkably procedural and boring. People are unable to afford homes and apartments because of simple tedium that takes place in beige board rooms at 11:00 PM on a Monday (i.e. local politics).