Supply and Demand

Alex Steffen on density’s effect on property values:

Density does not drive up property values: property values rise when there are more people who want to live in a set location than there are homes to buy. New density may make a place more desirable to live in, in which case more people may want to live there, and if demand rises more quickly than supply, home prices rise too. We know that it’s possible to create density which drives down property values (think about the awful public housing towers of the 1960s), by making a place somewhere fewer people want to live. We have a term for this well-proven process: supply and demand.

Density is a way to meet demand. Done well it can make a place more desirable. Done poorly it can make a place less desirable. In that way density is on both sides of the demand equation - driving it and providing supply to meet it.