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I get the point about housing constraints though the generalized claim that these constraints are the only reason for house prices to go up seems questionable.
The only other factor is land scarcity (alleviated via density ans transportation infrastructure). There is no third factor.
Here's another - Rich people often want to live near other rich people. So even if hypothetically costs remained constant or went down, you could still demand higher prices for any new house in Palo Alto, e.g. You don't think?
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