It seems obvious that limited availability of land can directly effect value, but density does not always equal desireability. What about Detroit as an example? Or bad neighborhoods in big cities? There can be zero land to develop in a particular neighborhood, but if no one wants to live there the value will reflect that. As for downtown SD, I think the values were driven up due to speculation more than anything else. I think that when the dust settles in about 2-3 years, it’s quite possible that downtown SD will be pounded by depreciation due to all the speculation and resultant overbuilding. And I think there are still quite a few lots that are or can ultimately be developed. I actually think downtown condos are going down harder than many surrounding neighborhoods with less “density”.
