A rescued comment

I've 'rescued' the following comment from here, to amplify the signal. 

There is a major factor that far too few experts understand. Urban areas can have a median multiple of around 3, and a low, flat urban land price curve - if they have unrestrained sprawl ex-fringe. This has the beneficial effect of anchoring site values everywhere, including the central core. This is not just obvious in the sprawling median-multiple 3 cities today, it was true in New York for decades. Hence the very dynamic building "up" that occurred in Manhattan.
But when ex-fringe sprawl is curtailed by something like a boundary or zoning, the entire land market is altered in the way prices are derived; the prices become "elastic" to all inputs, rather than anchored in "differential value to rural land". Under these conditions, site values become "elastic to allowed density". This has the perverse effect that upzoning inflates site prices faster than actual redevelopment of additional floor space occurs. Site owners have more incentive to "hold" (in anticipation of further capital gains) than they have to "redevelop". Manhattan-type building "up" becomes LESS likely, not more likely. Houston is the fastest-intensifying city in the USA today because of its sprawl and its disciplined, flattened urban land rent curve. 

...I strongly recommend the book "Economics, Real Estate and the Supply of Land" (2004); Alan W. Evans. There are other academics also from Britain, who are much clearer about this subject, because in Britain they started to ration the supply of land back in the 1950's and they have decades of evidence of the perverse effects for housing supply. Paul Cheshire of the LSE is also an outstanding author.

-ThePhilBest • 8 months ago

This seemed like nonsense when I first read it (and I called it such).  Eight months later (and some reading on housing affordability) I get what was being said. To me, this is the 'nut' of it: 

 "Site owners have more incentive to "hold" (in anticipation of further capital gains) than they have to "redevelop". Manhattan-type building "up" becomes LESS likely, not more likely"

It's a real, and inescapable phenomena, and one of the things that drives me more and more toward a Georgist Land Value Tax as being the only solution. Also makes me wonder if zoning has been holding down value values--I seem to recall an article being published to that effect, regarding Chicago zoning. It would certainly follow. Also suggests to me that the way to maintain the affordability of small single family homes (and prevent their replacement by monster homes) would be to downzone the lot, from just single family use to "single-family, no more than .25 FAR" or some similar form-based code solution.