> Interest rates make existing housing stock less expensive as people are unable to afford a property of the same price based on fixed monthly payments.

You are making overly-simplistic assumptions. Interest rates are one factor that can lead to prices going down to balance monthly payments, but you're forgetting that developers have to borrow money as well to build new housing or new condos or apartment units, renovate existing properties, and other things including running their businesses. This causes their IRR to change, and where a fixed monthly income from a new 35 unit apartment for rent or condo building or housing development makes sense at 0% or 1% rates, it may become unattractive at a higher rate or prices and rents have to increase to account for IRR. Don't make the mistake of assuming that higher interest rates simply lead to cheaper housing across the board. Even so, higher rates don't necessarily mean that housing prices go "back" to some historic price, and even then you have to account for various markets. San Francisco is going to be different than Denver, or Miami, or Topeka.

> Housing standards are relatively consistent,

Housing regulations, build rules and quality, size, etc. all these factors are consistent across the US and Tokyo/Japan? If so, that's news to me. I don't recall Ohio where I live having the same environmental reviews (for example) as California, or the need to build to withstand earthquakes. Or are you saying that Tokyo and San Francisco have the same housing standards?

> Developers will happily add any kind of unit they think they can sell, just look at what the city of SF is rejecting on a regular basis. But even if you only build luxury housing, that pushes existing wealth out of less fancy units opening them up to lower wealth tiers.

While it's true that San Francisco in particular may be rejecting units, you are making a mistake by equating "developers will happily add any kind of unit they think they can sell" with "developers will happily add any kind of new unit they think they can sell at an internal IRR based on interest rates and market conditions".

You are also mistaken because you believe that adding "luxury" housing creates a drop in prices for other housing, that does not necessarily follow when there is pent-up demand at the cheaper price points. What you do is just increase the median rent price, not lower it, in markets like San Francisco or New York or other highly desirable areas.

> New supply is new supply. Period.

Overly-simplistic and you can show that this isn't the case by a simple thought experiment where a developer builds nothing but $50,000/month condos or $5mm homes - supply is added but doesn't alleviate housing shortages.

> Lack of available workers factors into cost of construction, but cost of construction is absolutely dwarfed by market prices. If we were close at all to it, we could include (4) but we're just not.

What do you mean "cost of construction is absolutely dwarfed by market prices"? Are you saying that it's cheaper to build new housing and sell it than it is to sell existing housing?

> This constrains demand, but the point remains that in their market supply and demand meet. Supply and demand can meet by increasing supply or by decreasing demand.

Sure but you are oversimplifying things and you can't generalize Tokyo to the US or San Francisco. Do the same thought experiment with Hong Kong, Singapore, or London.

> Btw, Japan’s immigration policies are actually very lax, but the perception of their culture as unwelcoming to outsiders creates little actual demand. The US immigration policies by contrast are significantly more stringent.

I'm not sure this is true anyway, but it doesn't matter if the effect is the same = fewer immigrants. Difficult to compare Japan versus anywhere really so I'm not sure why you continue to do so.

> Density and transit are a chicken and egg problem. More density however allows you to invest more in transit.

Yes but it is still an existing problem which is why I mentioned it. Hard to build new housing when you have mandatory parking minimums and such (I believe but could be wrong that these were removed in California as a whole last year).

> This wasn’t the case historically and there’s no reason to think it can’t be the case in the future except for lack of zoning reform.

By that rationale land in California should be free/extremely cheap because it used to be in 1880.

> I look forward to your dissertation on why supply and demand stops working when it’s nice outside ;)

So climate isn't a factor in housing prices? Why are you taking such extreme positions? "supply and demand stops working" who said that? Certainly not me.

> Especially since during COVID rents fell massively in SF as supply outstripped demand - even thought the weather remained lovely.

I mentioned COVID already but it also primarily applies to office vacancies. San Francisco in particular is still very expensive to live in even despite COVID for obvious reasons - it took a global pandemic and entire shutdown of the city to get rents to drop. Populations ebb and flow, markets go up, they go down, etc.