Comment by JumpCrisscross
6 days ago
> Induced demand can only function if there's a scarcity to begin with
I don't believe this is true, assuming scarcity = shortage. Ad absurdum, if Denver overbuilt such that one could pick up a parcel for a song, you'd see opportunistic demand where there previously was none.
There's places all over where land, and sometimes land with buildings gets very inexpensive because there's not much demand.
Here's a listing for a parcel for $9000, that's been listed for over a year[1]. Denver seems like a nicer place than Detroit, IMHO, but it's possible for there to be more supply than demand.
I suspect at 5% annual growth in units, you would be able to reach the point where there's not enough demand for builders to recover costs. It might take a few years, depending on just how much unmet demand there is.
[1] https://www.redfin.com/MI/Detroit/1752-W-Canfield-St-48208/h...
In some places where well and septic costs say $25k to install, you can get land with working well and septic for $25k or less; the land is free.
But there’s an obvious limit somewhere, Denver with 5 billion units might still see demand, perhaps even ten billion (need that second house of course!) but once Denver has 20 billion dwelling units demand will have leveled off, no matter how much more supply is added.