OP has the demand part of the equation if supply remains fixed. The reason supply remains fixed is the US as a whole made policy changes in the 1970s that slowed down construction, specifically zoning laws and environmental laws swept the country. The 2008 recession also cancelled what little construction remained ongoing for a long time.

When you combine that with spiking wealth in Silicon Valley, you’ve got the perfect storm in Silicon Valley. With OpenAI and Anthropic both based in SF, it’s going to be worse than ever once they IPO.

The equilibrium for new housing construction will always be "just enough to keep it expensive by local standards [i.e. by local wages]." That's especially true with rising labor, material, and capital costs.

It was actually the post-war housing boom that was abnormal, fueled by aggressive federal funding of suburban buildout. US municipalities are now broadly doomed to bankruptcy trying to maintain sprawling infrastructure that was never cost-effective to create in the first place.

Look at Austin TX. Influx of new building, prices stabilized, and now construction is dropping off a cliff. No one can afford to build into a stable or potentially falling local market. Construction will start again when local productivity grows enough for people to bid the prices back up again.