Interesting, this sounds like the Old West. Look at it now.

I think these hardships are the exact indicators of a dynamic new frontier. Apply caution, yes, but ignoring it might not be a good strategy either.

I think "old cities" are pretty good too: the kind where they were built for people, rather than cars, and where you could build things without a dense thicket of regulations almost entirely unrelated to safety. Another thing that seems to work well is limiting the amount of up-front large scale projects and growing incrementally. No one can plan for everything ( https://en.wikipedia.org/wiki/Economic_calculation_problem ) .

Recommended reading:

http://www.strongtowns.org/

http://marketurbanism.com/

The Rent Is Too Damn High: What To Do About It, And Why It Matters More Than You Think: http://amzn.to/28W6et9

Edit - I'll add that I think it's great that YC is spending some money to look into this, as it's a huge issue for many desirable, productive cities these days. Huge as in billions of dollars:

http://www.bloomberg.com/news/articles/2015-05-07/here-s-how...