Sure, exclusion is part of the dynamic here, but by far the bigger part of it is that lots and lots of people actively like living in non-dense developments. Seriously: they really do. It’s not a trick. So they vote with their feet and move to the suburbs and then vote with their ballots to keep big-city living at bay. Given an ideal world, of course, they’d love to have a nice 3,000 square foot house with a big yard right in the middle of Manhattan, but one way or another, they want that house.
Obviously not everyone likes living this way, but an awful lot of people do. You can say they like a big house with a big yard, or you can say they like sprawl. It’s pretty much the same thing.
Kevin apologizes before writing this by saying that he didn’t sleep well and his brain isn’t working, so I’ll try not to be too harsh here, but this makes very little sense. But it should be pretty clear that saying that people would ideally like a big house in a dense area and saying that people like living in non-dense developments is obviously not the same thing. If people would prefer to live in Manhattan, then they’d prefer to live in Manhattan.
It is clearly true that some people prefer living in low density neighborhoods. Others prefer living in rural settings or small towns. Others prefer living in medium-density walkable areas, and still others like living in high-density neighborhoods with high-rises. It takes all kinds. What is clear from price data, however, is that there is unmet demand for walkable neighborhoods. Homes in walkable neighborhoods are expensive, and not because those homes cost a lot more to build. Homes in safe walkable neighborhoods are really expensive. And homes in safe, walkable neighborhoods with good schools are mind-blowingly expensive. Some people prefer to live in low-density neighborhoods. Price data suggest that many, many others would love to live in walkable neighborhoods but simply can’t afford to, because it’s difficult to build them. If it weren’t difficult to build them, people would build them, because home prices are well above the cost of construction. This isn’t that hard.
Now there are two other points to make. One is that some people might be more interested in home size than in neighborhood density, and since homes tend to be larger in the suburbs, they prefer the suburbs. I don’t know that there’s a huge premium associated with size, or what the elasticity of demand for square footage above a certain level might be. It’s certainly the case that walkable density is compatible with large homes; the District has plenty of neighborhoods that contain row houses with four or five bedrooms on three or four floors, which include fenced backyards. But of course, they’re phenomenally expensive.
Another point is that while there is clearly a price premium associated specifically with walkability, high prices in centrally located neighborhoods also reflect the economic advantages of location in and near density. That is, there is a large premium associated with living in Manhattan, because Manhattan has a very strong local economy. But Manhattan is all built at walkable scale. So high prices in Manhattan partially reflect excess demand for walkability and partially reflect excess demand for housing in Manhattan. Some people might hate walkable development but nonetheless choose to live in Manhattan for the economic benefits. If they could manage it, they’d much rather have the low density lifestyle in Manhattan.
But that only works for a few people. Say New York started selectively zoning parts of Manhattan for single-family home only use. The first few folks to buy would have a glorious time of things. But as additional people moved in, density would fall. Declining density would ultimately reduce the walkability of Manhattan, but perhaps more importantly, it would lead to a deterioration of the positive externalities associated with the high level of density. Density raises productivity and wages (see this, or this). And because of this benefit and positive spillovers associated with density, we find increasing returns to scale in cities. In many cases, the addition of another person to a dense area increases the return to others of locating in that area. And things work in the opposite direction as populations decline. The fact that residents of dense cities don’t internalize these benefits is one of the reasons they fight new development.
Low density suburban development eats up a lot of land while contributing relatively little to the positive urban externalities associated with density. And meanwhile, the combination of auto-centricity of suburbs with the inability of governments to correctly price congestion externalities means that suburbanites end up limiting urban growth in an economically unfortunate manner by reducing potential wages and raising the real cost of commuting into (and therefore within) the city. One reason sprawl is attractive is that the people living in it aren’t facing the true cost of their decision to live in sprawl (and this is without ever bringing carbon into the mix).