This is the correct answer, all the others are looking the wrong way.
We know it is the correct answer because it identifies how farmland sold by the acre can turn into residential land sold by the 1/4 acre. All because the zoning (and/or approved buildings) changes on that same land, the value changes substantially.
Anything that has such a dramatic change in value is subject to some kind of scarcity, like the difference between a real cezanne and a very good copy.
I believe some cities in Texas have relaxed zoning, and the housing prices are much more reasonable as a result.
Cities like San Francisco and New York are also subject to physical scarcity because of water and topographical features, but it is artificial scarcity that drives prices up.
How do you undo it? I don't think that is possible, simply because there is too much vested interest. Existing owners and banks must keep the status quo or the 2008 problems would look like a picnic. Maybe with some gradual relaxation over time the eventual market structure could be changed. It's doubtful.
I do think it is undoable just big monopolies with special interests such as the Rockefellers were broken up. It takes leadership (such as Teddy Roosevelt) that is given a mandate by the people. The issue is that this artificial scarcity, "rent seeking" is not visible to the public at large, esp. those who are renters and the young. Specifically, if rents in NYC were made aware they might vote their representative in city council out of office and the mayor as well.
We know it is the correct answer because it identifies how farmland sold by the acre can turn into residential land sold by the 1/4 acre. All because the zoning (and/or approved buildings) changes on that same land, the value changes substantially.
Anything that has such a dramatic change in value is subject to some kind of scarcity, like the difference between a real cezanne and a very good copy.
I believe some cities in Texas have relaxed zoning, and the housing prices are much more reasonable as a result.
Cities like San Francisco and New York are also subject to physical scarcity because of water and topographical features, but it is artificial scarcity that drives prices up.
How do you undo it? I don't think that is possible, simply because there is too much vested interest. Existing owners and banks must keep the status quo or the 2008 problems would look like a picnic. Maybe with some gradual relaxation over time the eventual market structure could be changed. It's doubtful.