Are there any real examples of this actually happening?

Local to me, Arlington and Reston VA have both seen massive building sprees over the past 20ish years (mostly adjacent to the Metro). Home values have never been higher in either location.

My own personal example... I live ~1 mile from the Metro, so just outside the building boom zone. There was next to zero housing in that zone - it was all office parks - and now it's a mix of $1+ million townhomes, $1+ million luxury high-rise condos, and dining/retail. My own home value is up 50% since COVID and that's true for just about any house in my zip code.

And without the redevelopment/infill, I posit the whole area would be less desirable. NIMBYism feels more about "change is bad" than property values.

Yeah, I live in Falls Church, which has seen more build-up than other areas in Northern Virginia because the city has never had the kind of restrictive zoning that the "Missing Middle" campaign is still fighting in Arlington. The value of my single-family home peaked in 2024 and has dropped slightly since. To my understanding, this is generally true of my zip code and not true of comparable zip codes in the area.

But Falls Church is much nicer now that a few mid-rise apartment buildings with ground-level retail have gone in! As a resident, I am very happy about all the new development. I expect that over time, that will have a positive effect on property values, but there is an observable short- and medium-term effect working in the opposite direction as the increased housing supply eases demand on the existing housing stock.

Do you believe that small drop is a result of new development or just a blip in the market? Price increases near me definitely slowed as interest rates increased, but we haven't yet seen a drop. But, as far as I know, this is one of the only walkable areas outside the Beltway, so there's a lot to like if you want to be untethered from a car for much of the week. It's also a relatively affordable area (vs inside the Beltway and some SFH neighborhoods) - my TH 1500sqft (1800 if you include finished basement space) would currently sell for ~$700k. The new-build THs are 2500sqft, with a garage or two, and sell for just over $1 million.

> Do you believe that small drop is a result of new development or just a blip in the market?

I don't know, and I don't believe it's possible to know in a specific instance. Like I said above, I believe that in the long term, denser towns raise the property values of their suburbs by making the area more desirable.

But there is definitely a plausible case that increasing the supply of housing immediately lowers or slows the growth of property values by reducing scarcity. It's the argument made by both sides of the "missing middle" debate in Arlington -- the pro side says it will make housing more affordable, and the con side says it will lower everyone's property values. The article we're commenting on found that at least some version of this is true for the Austin, TX -- increasing housing stock lowered rents, even if the new stock is luxury units.

But rents aren't the same as property values (though they are linked). Rents could go down while the value of the underlying land goes up (extreme example - build a high-rise apartment, land and building value goes up, even though the rent for each unit comes down). And the apartment market and SFH market are linked but also not exactly the same.

Also agree it's difficult/impossible to know for a single piece of real estate. And impossible to know for sure since the market is complex (impacted by rates, other policy decisions, etc)

You're right, but I think everyone is looking at second-order effects where causal links are impossible to prove. [0] is recent research on how expanding housing stock (even just at the top end) will "expand affordability," although they, too, are mostly looking at the effect on rents.

The most overt statement of "we don't want to build more houses because it will decrease the value of existing houses" in recent memory was Trump[1], who is not exactly a reliable source (and whose whole brand prior to politics was destroying the character of established neighborhoods by building giant condo complexes).

[0]: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5780364 [1]: https://www.msn.com/en-us/money/general/trump-says-the-quiet...

Literally the entire peninsula of the bay area is an example of this happening. You have people voting to "keep their small town feel" sandwiched between San Francisco and San Jose.

I meant examples of increased density reducing values, not NIMBYs stopping development.

Ah, well I still think it applies as a counter example. Avoiding density makes values rise, especially when combined with increasing office space density/local job growth.

In general I don't think it requires all that much thought in terms of why/how price changes happen. Housing demand is inelastic, and you can find examples of that causing both rapid price increases (metro areas with high friction building requirements) and rapid price decreases (metros with population declines) when out of equilibrium in either direction, which is exactly what you'd expect of a good with inelastic demand.

It's not a common problems in Austin at least. You (a property developer) buy a single home in bad shape on a big lot in the city. Then you redevelop the single home into 20 apartments, greasing the wheel appropriately (of the local government) to get the needed rezoning and permits. No one else can do this because they don't have the connections and monetary resources you do. You pocket the increase in value of that property (minus the cost of grease) by selling it off as "condos" which have dubious maintainability going forward. You never lived here anyways, you have a ranch in Bastrop.

The article we are commenting on is literally about this happening in Austin.

Sorry I meant to say "commons problem"