He said home values, not prices.

The value of a home to an owner should be higher than the price, otherwise they should sell and move. (We're talking theory here, there are a lot of good reasons why people don't do what they should).

Building more houses will decrease prices, but increase value. Until the two meet and then the new houses will stay unsold and will stop getting built.

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slopinthebag 4 days ago | parent [-]

Can you explain the difference between price and value here? Like I understand in general that the market price of a good might not align with the price an individual ascribes to a good, but in this case why would value rise with more supply?

	▲	nrr 4 days ago \| parent [-]
		In the case of housing, agglomeration effects play the biggest role. A single family house in the middle of nowhere is very scarce, but it also has limited economic productivity[0]. Notably, that lone house isn't enough to support commerce. It's also worth observing that land supply is a fixed constraint[1], and a platted parcel is what everyone should be looking at. The more inhabitants we can keep on a parcel, the more potential customers and employees we have for the businesses adjoining that parcel. -- 0: In some models, it's also said that this house has limited utility, but I'm reticent to put this front-and-center on HN. I've nonetheless left it here as a footnote to split the difference. 1: At least, it's fixed barring, like, land reclamation, which is extremely expensive.