Lack of supply is a problem, but is it caused by an inability to turn a profit? It seems like developers have no trouble making money from new construction. The difficult part, and the part that limits supply, is getting permission to build.
They aren't unrelated. The more hoops a developer has to jump through to get permission to build anything the more outside returns are required to get people to push to do that. The people who thrive in this environment aren't the most ethical of business people and you'd get more ethical developers if there were clear rules allowing certain things to be built and less outsized returns. But better that than nothing getting built.
You’re totally right. It just looks like the current situation in places like SF is almost entirely due to difficulty in getting permission. Remove rent control entirely and the supply wouldn’t increase much. It’s different in various other places.
