> Cities are becoming more expensive because of zoning.
If this were true, then all the US cities without zoning should be getting cheaper. But they aren't. They are also getting more expensive, and at similar (sometimes even faster) rates as major coastal cities.
> If you build enough housing that demand equals supply prices will be stable.
If this were true, then all the cities losing population should be getting cheaper. (Demand falling with stable supply should decrease prices). But they aren't, these cities are also getting more expensive, and at similar (sometimes even faster) rates as major coastal cities, despite the drop in demand.
If this were true, then all the cities outbuilding their population growth (cities where new units exceed new residents) should be getting cheaper. (Supply greater than demand). But they aren't, these cities are also getting more expensive, at similar/faster rates as major coastal cities.
> (Tokyo) property prices and rents are basically flat because they’ve built more housing.
No, Tokyo property prices are flat because they allow housing and land to depreciate, they don't artificially prevent that from happening.
The US does prevent this. The US does everything it can in basically every city to prevent depreciation from happening (often at the city, county, state and federal level).
If we had let the banks fail in the mortgage crisis last decade, for example, we'd have a much more accurate housing market in the US. But since instead, all housing in every city is guaranteed to appreciate, and since the full faith of the federal government forever backs that guarantee over a long enough time, there's no reason for property values in general to not go up.
Every investor with cash who wants the highest risk-free returns is looking at this situation and thinking "it's free real estate".