Up to a point, this is true when the affordable housing has had it's cost bid up by high end customers because of a scarcity of high end housing.
However, once that high end market pressure has been abated, then there a real and hard limits to the amount of high end housing that can/will be available to low income customers. Instead of being available cheaply, this high-end housing stock will end up being used as a vacation house or a short the rental, neither of which actually help reduce local demand for housing.
Suppliers will build more until the market clears. If prices are rising, that's a signal to suppliers to keep building. They won't stop until prices fall.
We’re not anywhere close to this in any of the high cost markets. But once we do get to that point another thing will happen: the lower demand for high end housing (there’s only so many vacation homes and short term rentals you can sell) will make it economical to build new mid-range housing
> there’s only so many vacation homes and short term rentals you can sell)
There are many markets the the number you can sell far exceeds the available land to build.
I fail to see how lower demand for high end housing makes it more economical to build mid-range housing? The price for that housing will be lower and land to buiody it on will be taken up by lower density high end housing.
High end housing construction is better than no construction, but please don't pretend it is sufficient to solve the need for other types of construction.
The amount to housing you can fit in a given metro absent zoning is basically unlimited. Manhattan has a population density of 75,000 people/square mile, and could be much higher without “air rights” limiting construction or the abnormally high percentage of commercial real estate. Many of the cities that are supposedly out of land have population densities an order of magnitude lower.
Developers today build low density single family homes often due to zoning. If the law says you can build 3000 sqft on a given lot, the most profitable thing to build is probably single family. But if they were allowed 30,000 sqft or 300,000 sqft then you’re almost surely going to get multi family instead. At that point high end and mid range condos will likely both be profitable, but developer returns would be better for the former (if they can find buyers). So as high end buyers become more scarce, more developers will transition to mid range
However, once that high end market pressure has been abated, then there a real and hard limits to the amount of high end housing that can/will be available to low income customers. Instead of being available cheaply, this high-end housing stock will end up being used as a vacation house or a short the rental, neither of which actually help reduce local demand for housing.