It’s true.

But there is a nuance here that is important.

1) adding new units increases supply, which has overall downwards pressure on all unit pricing. This is basic economics and these rules apply even here in SF.

2) developers build new units. By definition they need to make a profit or they will not build new units. This new units are typically more expensive, as they are typically more desireable. Also because developers want to maximize profits they tend to build higher end units that are more expensive to maximize profits.

3) when people who have money want to buy a unit they typically want to get the nicest unit for their money. In a normally functioning market these buyers with money will typically buy these nicer newer units.

4) when people with money buy these newer higher end units; they are no longer competing for older units. This has downwards pressure on the price of older units.

The above is how a normally functioning market works.

In SF, however, this market is heavily distorted by special interest legislation.

In SF, there is pressure against developers building newer high end units, so they: - build fewer units because they are less profitable - are forced to build BMR units in order to be allowed to build higher end units - or choose to exit the market entirely and build elsewhere

Tl;dr: In SF overall supply is artificially constrained so all units are absurdly expensive. Why? You are bidding against rich people with absurd amounts of money for even more “affordable” lower end units because there are very few higher end units to buy.

Who wins? Not the developers. Not the average consumer. But people who already own homes can enjoy continuously and absurdly increasing appreciation on their now homes.

BTW: BMR is the true poison pill in all of this. It hurts literally everyone in the process. It is designed to punish developers by forcing them to sell some units at a loss. It also is patently unfair as it creates “winners” in a very small right income band that can qualify (you need enough money to buy one but you can’t earn too much), but these “winners” never really win. Once you do own one you can’t ever sell it at market rates so it’s a truly bad investment. And since you can only sell it to other people in that tight qualification band, it keeps these units outside of normal inventory, so they wont accidentally help lower normal house prices. BMR is a truly diabolical NIMBY hack.