Will Wynn understands that supply and demand affect prices!

Mayor Wynn, as quoted by News 8 Austin yesterday (access video here):

Obviously, the more supply we have, and if demand stays the same or grows less than the supply, then prices will come down a little bit.

He was talking about hotel rooms rather than houses, but it's good to get confirmation that he understands the principles of supply and demand.  (He had a sheepish grin as he said this, almost as if he expects those words to be quoted back to him someday.)

Really, I've never thought he was an idiot, or that the Councilmembers' anti-supply bias on housing was the result of ignorance.  They're just intimidated by the NA groups.

Comments

[Jeff]

"it's good to get confirmation that he understands the principles of supply and demand."

It's a shame you do not. As I noted in an earlier comment, with higher supply (e.g. out in the suburbs) you get lower property values, lower appreciation potential and higher risk (suburban areas, historically speaking, ALWAYS decline in value more than urban cores in the event of the usual real estate market corrections). Your argument is also fallacious in that, McMansion ordinance or not, there will ALWAYS be a limit on supply in the form of lack of available land. There are very few empty lots remaining in Central Austin, and the number of buyers interested in demolishing an existing house and spending a year or more building a custom one is limited. Sure, developers can (and do) build houses on spec, but those are almost entirely for the upper-middle-class and rich, and they do nothing for the average prospective homeowner.

[AC]

I have not argued that the McMansion ordinance will reduce home prices across the board. Rather, I've argued that it will make large homes more expensive, and will transfer wealth from small-lot owners to large-lot owners.

Regardless, your argument that home prices are high because of a limited supply of land is wrong. Land may be limited, but the number of lots is not. There is no natural law that prevents us from allowing smaller lots or more multi-family. NY, San Francisco, Portland, DC -- all are much denser than Austin. They got that way by allowing denser development in response to high prices.

There is lots of serious research showing that the culprit for high home prices is restrictive land use regulation, not a limited supply of land. (Check out the papers in the side bar.) Land use regulations force people to buy more land than they want. Lots of people will gladly sacrifice lot size for home size. Developers know this, which is why they basically ignore yards when building infill development.