Right clearly, as supply meets demand and prices stabilize or start to drop, new supply will slow down. You can easily have scenarios where lots of supply is being built at once and outruns demand by a lot and causes a short term drop in prices, but that still won't cause supply to drop.
I think arguments like the one in the article have over-learned the lesson of 2008. Yes the financial crash in 2008 wiped out so many home builders that capacity to create supply was lowered. But that's not the sort of event that is caused by high supply.
This discussion so far ignores cost. That's a problem.
And cost has to do with intensity of effort. In the case of construction, if there is less construction going on, then there is ("all other things being equal") more personnel available: so less delays and less hourly cost. If there is less construction going on, there is also less pressure on materials suppliers, so less expensive lumber, concrete, etc. So that it's easier to make a profit. So that it might make sense to build lower value housing. While when construction is booming, there is extra less incentive to build lower value housing.
Of course, if land availability is artificially constrained, then there is never much reason to build lower value housing. The profit is elsewhere.
Investors & developers are motivated by profit, lower prices reduces (expectation of future) profit, so less housing will be built.
Right?
Yes, article is too wordy and lacks focus. Typical for us progressives.
OC prescribes "bottom-up" something something. I haven't read Housing Trap, so can't comment.
My prescription would be for policy makers to work with investors & developers, figure out how to make profits more stable and predictable, figure out how to institute those reforms.
I'd also consider restructuring the housing industry. eg IIRC in Germany, developers are often also landowners. So they have longer horizons for considering profitability. Seems like an obvious reform, especially considering climate crisis. Like design & build wrt total lifetime cost of ownership, so adopting passivhaus and activhaus innovations is a no brainer. (Just trying to say when landowner is also developer, they can capture more profit by incorporating better tech.)
> Price Drops Don’t Lead to Supply. They Kill It.
No one believes price drops cause an increase in supply. They believe an increase in supply causes price drops.
> If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals.
People believe that increasing supply will lower prices, not "stabilize the system". The current system is plenty stable, and thats the problem.