Good argument.
Michael Andersen
1

Why developers will keep building

Our response to Michael Andersen

Ah, we were talking at cross purposes sorry!

Yes, if the developers knew that only 200,000 homes were coming and then SF would revert to NIMBYism, it might make sense for individual developers to postpone development, so long as the expected increase in sale prices later was more than the cost of carrying the debt (or other funding) on the land in the meantime.

On the other hand, if we manage to engineer a sea change so that permits to build housing in SF are set to catch up with demand over a number of years (which will take millions of homes), the scarcity value of land which has permits to build will decline inexorably over time.

In those circumstances the land is a wasting asset and any sensible developer will build the development and sell as quickly as possible.

Does that make sense?

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