The problem is that due to the way most property taxes and house prices work those people are getting a free ride off of the prosperity of the city: a tragedy of the commons.

Assuming this quiet neighbourhood is near an urban area with nice jobs/schools/amenities etc, the value of the 'hood is created by the network effects of the city. Growth of the city means growth in the value of that 'hood. The people living there usually aren't doing a lot to increase the value of their properties. But as property assessments lag market values, or the way taxes are structures, those owners can see flat costs for their housing while their values rise. Meanwhile by refusing to add density to their neighbourhood they are driving up the costs for others. When they eventually sell or move they get all of the gains in property value all the while having very low carrying costs.

If they wanted a quiet neighbourhood they could move to a smaller town or further out from the city centre, but I don't think they do. If the market were better organized then their behaviour would be dampened by higher taxes as their property values rise. Owners would then have an economic choice: resist density in your 'hood and pay more for that privilege, move somewhere cheaper, or allow more density which will keep costs flat.

> If they wanted a quiet neighbourhood they could move to a smaller town or further out from the city centre, but I don't think they do.

Well, I did move out to a smaller town, pretty much as far away from the regional megapolis as I could while still being within reach of its metro area. But it seems that demand for "moving out" is such that it turns small towns into big towns pretty quickly, which kinda defeats the purpose. I'm not opposed to paying higher property taxes to keep the neighborhood low-density, but it's not like we even get that option.

Yeah I hope we can eventually find a way to price these kinds of things more accurately. Like a sibling comment says: price in the externalities of low-density living and let those who want to pay them pay them, or else increase the density of the area.

In your case it's sounds like you're paying it to some extent: longer and/or more expensive commute.

We do a terrible job of capturing all the externalities that come from that low density. Low density requires much more infrastructure to serve it, and gets subsidized by the high density areas further in. If all that was captured in the actual costs of living in those low density areas, you might very well decide that low density was too expensive, and that you preferred high density areas instead.

If you can afford to waste land out of your own pocket, go right ahead. But supporting and subsidizing people who want to live an economically inefficient and socially detrimental lifestyle, in part by outlawing efficient and pro-social alternatives, is a terrible use of government power.