There are those that do who would gladly fork over a good chunk of change for their lots.
> It would also require displacing current residents, who won't have anywhere else to live while the new building is constructed.
Yeah, lets inconvenience 99% of people just so those few won't be.
And yes, those that would like to live in the city but can't because of the ridiculous rent or simply lack of rent-able places.
"But for the tight limits on construction in California’s Bay Area, they reckon, employment there would be about five times larger than it is. In work that has yet to be published they tot up similar distortions across the whole economy from 1964 on and find that American GDP in 2009 was as much as 13.5% lower than it otherwise could have been. At current levels of output that is a cost of more than $2 trillion a year, or nearly $10,000 per person."
http://www.economist.com/news/briefing/21647622-land-centre-...
If you could live comfortably in SF on $30k/yr like you can in a lot of college towns, you'd be able to bootstrap a company for a couple years on just your savings, which would increase the variation in startups -- you could see more genuinely ambitious startups which didn't depend on getting funded.