There are counterexamples around the world. Tokyo has not had rapid home price appreciation because increases in demand are met with increases in new building.
So let's carry on with this hypothetical. Say we opened the floodgate of development. What kind of effects could we expect? The economy would grow, and by a lot. According to a recent paper by the economists Chang-Tai Hsieh, from the University of Chicago's Booth School of Business, and Enrico Moretti, from the University of California, Berkeley, local land-use regulations reduce the United States' economic output by as much as $1.5 trillion a year, or about 10 percent lower than it could be.
That is a theoretical figure that includes easy-to-see things like increased sales of building materials and more jobs for construction workers. Most of the increase, however, would come from more abstract gains like increased wages for people who are willing to move from an economically distressed city to a faster-growing economy elsewhere, but are currently unable to because housing is too expensive.
Over time, the accelerated pace of building could lead to a long-run deflation in home values. But for the most part that would be limited to a few coastal cities. And while the older homeowners there would most likely be resentful of all the new apartments, condos and townhomes that caused their home equity to shrivel, younger people would have an easier time getting started.
Moreover, it's likely that lower home prices would encourage workers to move farther and more often in search of job opportunities. The impact on mobility could be huge, as the $1.5 trillion figure shows.
There was a time, a few decades ago, when the cost of living did not vary all that much from city to city. Since then, as places like New York, San Francisco and Seattle have been hit with skyrocketing rents and home prices, the regional disparity in housing costs has altered how Americans of different incomes pursue opportunity.
Back when home prices were more even from place to place, people with different levels of education and income tended to flock to the same types of high-wage places, according to research by Daniel Shoag, a professor of public policy at Harvard, and Peter Ganong of the University of Chicago.
Today, people with less education tend to go where housing is cheap, like Las Vegas, while college-educated workers with skills that are in demand still go to places where wages are high, like the Bay Area.
That's because lower-income people have little to gain by going to California's coastal cities. Wages might be higher, but as the state's poverty figures show, a better paycheck doesn't help if it's swallowed by rent. The loss of mobility makes income inequality worse, because lower-wage workers are effectively locked out of exactly those places where wages and the demand for workers are greatest.
Finally, if housing were plentiful and cheap, we would probably stop having big housing bubbles. One good way of describing a speculative bubble is a moment when society deludes itself into believing that something plentiful is scarce, or will soon be. In the mid-2000s, banks and homeowners came to believe that homes would be scarce in places like Las Vegas and Phoenix, even though there were enough materials, land and labor to keep building and building and building.
Housing is particularly prone to bubbles because, in contrast with other products, we seem to want it more when it is expensive and less when it is cheap. And no matter how many times we look out an airplane window to see vast acres of emptiness, we somehow still believe that land is a great investment because nobody is making more of it.
Homes would still hold a lot of value; they still might appreciate, if more slowly; and desirable neighborhoods would still seem relatively expensive. But there would probably be fewer manias in which people expect home prices to double in just a few years.
Just as we don't expect to make a profit selling our cars, if we stopped thinking of our homes as big moneymakers, we would probably start focusing on building them faster and less expensively.
Jeff Wilson, a college professor turned entrepreneur who refers to himself as Professor Dumpster for the year he spent living in a metal trash container that he turned into a home, is trying to make this happen on a small scale. Mr. Wilson's nascent company, Kasita, wants to produce a line of one-bedroom homes. They would be identical in size and bought for a single price, and could be placed on city lots that traditional developers are unlikely to be interested in.
Homes would be stacked together, creating de facto apartment buildings that could be built and unbuilt in a few weeks. Although that wouldn't do much to help a family of four, it might take some pressure off the housing market by directing younger people to studios instead of having them pile in together, freeing up some three-bedroom apartments for families.
For now, Americans seem unlikely to embrace this vision on a large scale, and even if they did, it would take a long time to start seeing home prices drop or flatline. But mass-produced homes from the past — brick townhouses or bungalows that came from a Sears catalog — are now sought after, so this imaginary world needn't be uglier, though it very well may be.
Also, even if homes were a lot cheaper, we would probably retain the societal benefits of homeownership: As Mr. Glaeser and Mr. Gyourko's data shows, housing is already relatively affordable in the vast majority of American cities. So there is little reason to believe that people would desert overpriced neighborhoods if they suddenly became cheaper.
This does not mean that select places like New York's West Village or San Francisco's Mission District would suddenly be affordable — or that American cities would suddenly fill up with towering condominiums and blocks of identical rowhouses. Housing is a regional problem, spread across miles of cities and suburbs, so a lot of new development would probably occur in close-in suburbs where there is more land than people think.
Take Boston. The median Boston suburb has a minimum lot size of one acre, and many suburbs have minimum lot sizes of one home per two or four acres. That is a huge drag on the region's overall housing supply, according to Mr. Glaeser.
Yes, adding more homes, even medium-density ones, would annoy people looking for less crowded quarters. But the nation as a whole would probably be better off, both in jobs and in financial security. The money not spent on housing could flow to other, possibly more productive, investments — like stocks in new companies or bonds for infrastructure projects.
Of course, our view of homeownership is so entrenched in our economy, our political system and our tax code that it would be impossible to change in a short time, and probably even in a long time. But there could be political and societal benefits. What if local decisions that today are dictated by fears of declining property values could instead be made with an eye toward what's best for education or job growth?
The point of this thought experiment isn't to embrace it full-on, but to open our eyes to the negatives of the national obsession of owning a home, expecting its value to rise, and using the levers of local government to keep neighborhoods as they are.