This is really a misnomer (and it is the linchpin of NIMBY arguments, especially in the Bay Area). If high income housing is not built, then high income people will inhabit and buy up the middle income housing, who in turn will inhabit and buy up low income housing, if they can find any at all.

You can see this clearly in the Bay Area. You have tiny houses going for like a couple million dollars.

In such an environment it's impossible to build stuff (at least, legally) that ISN'T high income housing as high income people are the only people who can afford any kind of housing in the area.

"But it's only made for high income dwellers." Build a cheap (but code-compliant) 600sqft studio in the Bay Area? Around $900/ft^2 would be the market price. It's only affordable to high income folk. A studio. This 161sqft studio in San Fran is $2300/month: https://www.businessinsider.com/smallest-apartment-for-rent-...

How is it even possible to build housing that isn't for high earners in San Francisco?

The only way to change is to build a LOT more and keep building. Or, I guess, destroy the entire local economy.

That's certainly not true in SF. Housing quality certainly runs the entire spectrum here, but in the last decade I've seen low-income renters forced out of ok-ish buildings, and replaced with several high-income renters who do the roommate thing in order to afford it all.

Over time, even building "market rate" (which some people erroneously call "luxury") housing in SF will start to free up the older housing stock that's being occupied by people who in any other market would be considered high-income, and return that housing to its former middle- or low-income renters.

Regardless, with the exception of subsidized housing, it's not even possible to build low- or middle-income housing in SF right now. If you build anything at any size, it will immediately price out of budget for any low-income renters, and most middle-income renters. Part of that is just because landlords and sellers charge whatever the market will bear (which is a lot), and part is because new housing development gets so much opposition that it costs developers way more than it should to actually complete a project (it can take years and countless lawsuits and legal fees to even break ground), and they need to recoup their costs and make even a modest profit somehow.

That doesn't seem right to me. Sure, the develpoers will have incentive to build the largest profit earning housing, which right now (because of a huge housing shortage for all pricing ranges) means building high-income housing. But a high-incomer earner that buys those stops competing for the fixer-upper middle income housing so that's good for other price ranges too. What's more, at some point you run out of high-income earners that will buy your expensive newly built property which requires dropping prices on existing built property _or_ starting to build the next most profitable housing, which is less profitable than before but you don't have a choice.

Now arguably, for all that to happen it takes time and the ability to build a large number of housing units, both of which may not be an option so I'm fine as a compromise to require for certain percentages of new housing to include tiers for lower pricing levels, as a requirement for the housing permit.

> 2) the people living nearby, do think it will drive down prices, including the price of their own house, which is their only effective form of savings.

There is a point where, as a society, you need to decide what's more important: giving existing owners 50%+ returns on their property or supporting new families moving in. As usual the answer is somewhere in the middle but I'm willing to bet it would go a lot against the current situation that the existing owners enjoy. After all, owning a house provides a lot of other benefits so as long as the increase in value covers for the cost (interest + taxes + maintenance) it seems fine to me.