100 people want to live in a neighborhood but there are 20 homes. The wealth of these people follow a standard bell curve.

Who gets to live in the neighborhood?

The next year the city passes a policy that leads to the creation of 40 more homes.

What happens to the price of homes, again with a standard curve where everyone has a varying max budget

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It is worth noting that there if a regional housing crisis and increased demand for walkable neighborhoods. This example assumes demand is constant. The solution is not to prevent Cambridge from building more housing, but to encourage/force surrounding towns to build more housing.

The population has simply grown and we haven’t built homes to keep up