[6gvONxR4sf7o]

The network effects of cities increase with density. The more people move there, the more incentive there is for people to move there. The cost of housing is a function of that marginal person who is on the verge of moving there. If I’m on the edge, then all my friends and all my employers move there, then I have even more reason to move there too. When you move there, I’m willing to pay more to move there too.

In other words demand isn’t constant.

As I understand it, it’s an open question as to whether more housing means lower prices via simple supply and demand, or higher prices via network effects.

[ItsMonkk]

Exactly. Every person living in a city is a positive externality for the businesses. And every business is a positive externality for the residents. It's a network effect. The more people in a city, the better it is. The people who own empty lots contribute nothing, and their empty lot keeps going up in value.

When you incentivize people to say no to housing because the more they say no, the higher the value of the house, they are going to say no. It doesn't matter how much the state demands. You don't want centralized forces creating a mess, you want decentralized forces. We need to stop swimming upstream.

The only way out of this is to tax the land equal to those positive externalities. The only way out is a Land Value Tax. When you under tax the land, the price of the house balloons. Once you have a Land Value Tax in place and increased housing supply means lower taxes, all the NIMBY's will quickly convert to YIMBY's - it will be a breeze to get new housing built.

Fix the incentives. Land Value Tax[0].

[0]: https://astralcodexten.substack.com/p/your-book-review-progr...

[6gvONxR4sf7o]

> the more they say no, the higher the value of the house

Isn’t the argument we’re talking about saying the opposite? The more housing (i.e. the more they say yes), the higher the value of their house?

[ItsMonkk]

Ahh.. I was less precise than I should have been. Words can be tricky - let me be more technical.

There is price and there is value. The more they say yes, the more value you get. The more they say no, the higher the price.

[ItsMonkk]

Oh, realized a better way to explain this.

When you say yes, you grow the pie. When you say no, you get a bigger piece.

[kelnos]

On the flip side, though, we've already seen what limited new housing does: much, much higher prices, and people getting priced out of their homes. More housing might not solve everything, but less housing is what's causing these problems.

People won't stop wanting to move here just because housing growth is slow. While the prices are very high right now, there are still enough people who want to move in who can at least vaguely tolerate those prices. That doesn't mean the system is working, though. That just reminds me of the old stock market adage, "the market can remain irrational longer than you can remain solvent".