> "If local regulations did not do much to discourage creation of new housing supply [...] Costs would rise [...] And the value to the marginal resident would fall for two reasons. First, the marginal resident will definitionally be someone who is relatively indifferent between living in San Francisco and living somewhere else. Everyone more eager to live there would already have moved in."
That seems wrong. How much someone is willing to pay to live in San Fransisco isn't a measure of their "eagerness", but also a function of wealth. Marginal people in San Fransisco are also poor people who love the city, and are barely able to live there because they spend such a high proportion of their income on costs of living. Relative to their household income, they spend _more_ than someone not marginal to live in the city, but that wouldn't be reflected by their migration patterns. They're not less eager, just less rich.
That seems wrong. How much someone is willing to pay to live in San Fransisco isn't a measure of their "eagerness", but also a function of wealth. Marginal people in San Fransisco are also poor people who love the city, and are barely able to live there because they spend such a high proportion of their income on costs of living. Relative to their household income, they spend _more_ than someone not marginal to live in the city, but that wouldn't be reflected by their migration patterns. They're not less eager, just less rich.