>(For example, luxury condos get built, but affordable housing does not.)

One think to think about, in a lot of areas where only luxury condos are being built, there tend to be pretty limited numbers of condos being built. If you are a developer and you know you will only be allowed to build 50 units, you are going to build the most expensive units you can so you can maximize your gross profit even if the marginal profit rate isn't as good. If you were allowed to build 1000 units, you might choose to build affordable housing that has a better marginal profit since the larger number of units allows you to have a higher gross profit.