alt Hacker NewsThe one thing that makes assumptions about free market forces miss the mark is the fact that ideal markets don’t exist in the real world.
I case of housing, in the US, we’re as far from free market as possible. So making assumptions about what will happen if we build more based on a naive supply and demand model isn’t going to work.
A paradigm shift is to think in terms of power distribution and policy incentives. Why would a homeowner support zoning reforms? Even if they become a minority, will they be able to get the others to not vote or vote against their own interests?
The system caps its own growth.
The housing market in the US is extremely competitive. Major cities have hundreds of thousands if not millions of competing landlords and a similar number of owner-occupied units.
The supply constraint isn't that Comcast and AT&T each own half of the land and you can only get it from one of them, it's that the government effectively prohibits building more, so all the competing construction companies who want to increase supply because that's what makes them money are unable to do it because it's prohibited by law.
> Why would a homeowner support zoning reforms?
Because zoning reforms that allow higher density may lower the value of the house but increase the value of the land, and homeowners of single-family homes have a high ratio of land to house. And because they lower cost of living and lower crime and they like paying less for things and not getting robbed.
Or because they have a small house but need a bigger house, and then higher prices hurt them. Or because they have a bigger house and need a smaller house, in which case they're about to sell it and it's better for them to add a bunch of developers to the bidding who want to build more on the lot and then cash out before the new developments come onto the market. Or because they live in city B and want to move to city A where housing is more expensive, and then they would support state or national-level policies to reduce housing scarcity for the same reason as the person who needs a bigger house.