This seems to be claiming something different, though? You are pointing at that development slows as prices go down. Which seems somewhat expected?
That is, adding supply lowers prices. And lowering price reduces potential profit such that fewer people will build. With fewer people building, prices should go up again.
Stated differently, thin margins reduce the number of people offering products in a market. Ironically, the main way to get more building is with bigger builders in that scenario.
Well I'm saying that in practice adding supply hasn't lowered practice it has merely slowed the increase in prices. And that's mathematically essentially the same thing, but it's importantly different in two big ways:
1) If people see their costs going up while they also see new construction, the correlation machine's gonna jump to the wrong conclusions
2) If costs are still going up people are still going to be unhappy and worse off
Supply can increase AND price can still go up, and so for people to be won over and convinced you need to crack the second part, not just the first part. In a libertarian "just reduce regulation" approach that's often pitched, the natural equilibrium will be closer to "supply increase and price go up slowly", and people skeptical of "just reduce regulation" as a solution are more accurate than they're given credit for. Gotta actively intervene to make supply increase enough for any sustained period of time - we only see it in cases of macro shocks. Like the 2008 recession, or the post-Covid-bullwhip.
Ah, fair. And I see how this goes in with your idea of government spending.
It is frustrating, as that feels like an easy argument to show why a lot of things decreased in price. You had governments spending a ton of money. Or incentivizing the spend. Usually both?
I think my approach there would be to say you can't use profit as incentive to lower housing prices? For the exact cycle we both spoke to.
This is my big "abundance pill" that I've swallowed. It isn't necessarily deregulation you need. But if you want a goal, you have to spend towards it. And "lower prices" is a goal. To get there, governments will have to spend money.
That is, adding supply lowers prices. And lowering price reduces potential profit such that fewer people will build. With fewer people building, prices should go up again.
Stated differently, thin margins reduce the number of people offering products in a market. Ironically, the main way to get more building is with bigger builders in that scenario.