> Even if we suppose that you allow infinite construction, there will always be certain houses or parcels of land that will cost more, perhaps because of being closer to certain things.
In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost.
> If an area is desirable because of nature, then naturally those who first live there will prevent the destruction of said nature that brought them there to begin with.
"Nature" e.g. Montana or Alaska or the Ozarks. Do you believe these to be the places with high land costs and restrictive zoning laws?
> In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost.
Why would this happen? You're talking about the construction of more housing like it's free.
Perfect example of this is something like Chicago - let's say you live right near the loop and are fortunate enough to have a SFH that's huge. The land is worth a lot, and you like your lifestyle. Sure in some perfect world that house would be purchased and turn into a high rise, but you want to live near the loop and have a SFH. Therefore that house will be expensive.
Others in similar situations will do the same. Later more people will come to Chicago and see that they want that lifestyle as well - these types of houses will then command a premium.
Not everyone will sell to a developer to turn it into a high-rise.
> "Nature" e.g. Montana or Alaska or the Ozarks. Do you believe these to be the places with high land costs and restrictive zoning laws?
> Why would this happen? You're talking about the construction of more housing like it's free.
Not free. Less than the market price of existing real estate.
Suppose you have a 10,000 square foot building and it costs a million dollars to knock it down and build a 20,000 square foot building on the same lot. If doing this would cause the new building to be worth $500,000 more than the existing building (because local housing supply is high relative to demand), you're not going to do it, because you'd lose half a million. If doing this would cause the new building to be worth $1,500,000 more than the existing building (because local housing supply is low relative to demand), you are going to do this -- unless prohibited by zoning. Because you'd make half a million.
So when housing prices go up, you'd get more construction, until they go back down below the construction cost.
That doesn't cause housing prices to hit zero, but it establishes a long-term price ceiling, because any price above it makes new construction profitable, and increased supply lowers prices. So housing costs would converge on construction costs even if demand changes.
> Are those areas desirable? I've never been.
Those areas are beautiful, and the land is cheap and hardly anyone lives there because they're far from major cities. It's not proximity to nature that makes land expensive, it's proximity to jobs.
In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost.
> If an area is desirable because of nature, then naturally those who first live there will prevent the destruction of said nature that brought them there to begin with.
"Nature" e.g. Montana or Alaska or the Ozarks. Do you believe these to be the places with high land costs and restrictive zoning laws?
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