If they're rental units, that's also ok, more supply brings down rents and lower rent causes more landlords to sell. Extra supply does add downward pressure on prices one way or another.
I don't see where the "value destroyer" is.
You buy condos, you own them, and you can get a mortgage on them. I think you don't know what a condo is.
People say that on here all the time, but I have never seen that happen. Do you have an example where increased housing supply lowered prices aside from a natural or market disaster? Maybe, Detroit where people simply abandoned their homes with no intent to sell.
> While the cost of housing is climbing in many global cities, the average middle-class family in Tokyo can still afford to buy a new, single-family detached home for $300,000. That’s right. The typical Tokyo starter home is a brand new three-bedroom.
Their national zoning rules allow supply to meet demand without city-level meddling. Houses there sell for roughly the cost of construction.
The reason housing is so nuts in SF is because the city added half as many new houses as required to meet demand over the last say 30 years. [2]
[1] https://archive.curbed.com/2017/2/3/14496248/tokyo-real-esta...
[2] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
We need small 3br houses and apartments. That doesn't mean we can't also have large 3br houses.
[1] https://www.zillow.com/homedetails/139-Steiner-St-3-San-Fran...
This is not quite the same thing as an immediate increase in supply, but instead a large drop in demand. The net result is the exact same thing: a large increase in the vacancy rate, which resulted in a rapid and dramatic decrease in median rents.
https://www.bloomberg.com/news/articles/2020-12-08/san-franc...
Has the decrease at about 22% at one point. Lowest rents since 2013. They seem to have gone back up somewhat since, but that is a big adjustment and reflects excess supply.
Is there some effect in real life that prevents it from working the way the theory predicts?
I don't think so. I would put the burden of proof on you, if you want to go against a solid theory. It seems self evident that more housing supply means houses stay on the market longer (there is lots of evidence for that) and that means sellers have more incentives to lower the price to get a quicker sale (lots of evidence for that too.) Look for historical real estate inventory reports that include prices and you should see the effect when time on market increases.
It's important to note that prices would only fall if the change in supply overwhelmed the change in demand. In cities like Vancouver the demand is increasing at such a rate that increased supply only means prices don't rise as much as they would have otherwise. Time on market is always short. There was a brief dip in prices early in the pandemic and then things compensated back in the other direction.
Guessing at some 9th grade economics theory aside, what does the actual data say?
Ignoring data like this is the only reason I can think of why people are willing to pay 10x more for a house of half the size that I paid.
https://www.sightline.org/2017/09/21/yes-you-can-build-your-...