October 9, 2014

Berkeley Bugle: Supply and Demand in San Francisco

Peter adds to the SF housing debate with this piece from truthout:

“It’s a complicated issue and you just can’t quote Adam Smith in your Economics 101 textbook to say that’s going to solve the problem,” said Doug Engmann, a venture capitalist and original member of the Pacific Stock Exchange.
He’s referring to laws of supply and demand, which dictate that price equilibrium will be reached when quantity demanded by consumers matches the quantity produced by suppliers. “You have to understand how they work in special situations and you have to look at the situation that we’re in,” Engmann said during an interview in his financial district office.

This feature debunks supply-side arguments myth by myth and gives recommendations for solutions. Upzoning won’t solve the housing crisis. Luxury demand by techies is the most dominant factor driving up prices. No matter how low building costs dip or how streamlined the process becomes, as long as that luxury demand dominates, developers won’t prioritize the housing needs of working-class people.

Full article here.

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