If you consider the fact that developers have been building at near peak-Dubai paces in Seattle for salable prices that are much lower than the bay area, I'd say you're worried about nothing of consequence. If you merely let them, they'll build until they can't cover their costs.
I don't have the data at my fingertips, but IIRC Seattle housing prices were historically lower than SF, but higher than Portland OR. I think that could make it hard to assess the effects of bringing more housing on line in Seattle, at least comparing to SF would be misleading. However the history of housing costs in Seattle might be informative.
> If you merely let them, they'll build until they can't cover their costs.
The problem in the building industry is that financial commitments are made years in advance, meaning even if things are in a slump, units may be built anyway because the project was on track to happen well before the slump came about. It's also occurred that units are constructed just before a slump hits and as a result the completed units sit empty, the developer goes bankrupt, etc. Overbuilding can and does happen and it can take many years, even decades for a property to finally break even.
>The problem in the building industry is that financial commitments are made years in advance
>Overbuilding can and does happen and it can take many years, even decades for a property to finally break even.
And in that, the building industry is no different from airlines, oil refineries, auto makers, chip fabs or any other capital intensive industry. Why should we privilege the building industry over the others?
> I don't have the data at my fingertips, but IIRC Seattle housing prices were historically lower than SF, but higher than Portland OR. I think that could make it hard to assess the effects of bringing more housing on line in Seattle, at least comparing to SF would be misleading. However the history of housing costs in Seattle might be informative.
Not sure why you think historical prices matter one bit. Seattle is proof that you don't need San Francisco prices to continue building. Developers from LA and SF can and regularly do build in Seattle where prices are lower but regulation is less obtuse, and many times they end up using Californian general contractors who prefer higher utilization over higher rates with more downtime.
> The problem in the building industry is that financial commitments are made years in advance, meaning even if things are in a slump, units may be built anyway because the project was on track to happen well before the slump came about. It's also occurred that units are constructed just before a slump hits and as a result the completed units sit empty, the developer goes bankrupt, etc. Overbuilding can and does happen and it can take many years, even decades for a property to finally break even.
Overbuilding may occur, but units don't sit empty. They always end up renting out, until the rent is so low that they can't cover variable costs like maintenance. If the rents aren't high enough to cover debt servicing, they'll still rent out...the owner will go bankrupt, they'll lose the property and the lender will take a loss, but the property will be sold by the courts at a price where someone can make money off the current rents.
Despite what you may think, developers will continue developing if prices move downward. Downward price movements primarily impact landowners and lenders, not developers. If developers see downward price movements, they start bidding less on land.
Does that count as near-Dubai speed? Amsterdam is building 50,000 appartments over the next 10 years, and that's considered not enough. But there's simply no space to grow here. These are the last few empty corners of the city being filled in.
