If you’ve been watching real estate lately, you might notice something strange: one neighborhood’s values stay steady or even tick up, while just a few blocks away, homes are flat or slipping. What gives?
The answer often comes down to scarcity.
Scarcity vs. Supply
When there are only so many homes in a certain community — and not much new building — the supply is naturally capped. If those homes also have features buyers consistently want (good location, community amenities, floor plans that work), demand holds steady. Even in a market where buyers are cautious, that limited supply helps keep prices from sliding as much as elsewhere.
Why This Insulates Equity
Think about it this way: if you own in a neighborhood with steady turnover and lots of alternatives, buyers have more negotiating power. But if you own in a community where only a handful of homes change hands each year, you’re holding an asset that’s harder to replace. That scarcity insulates your equity — meaning your home’s value is less sensitive to the broader ups and downs.
A Real-World Example
Since 2021, many single-family homes across the pocket of houses right above Marina Del Rey have leveled off in price. But certain townhome communities in the same exact pocket of LA with very limited turnover have actually continued to climb in value. Same 1 mile area, same interest rates — totally different outcomes. The difference isn’t luck. It’s scarcity at work.
The Long Game
Scarcity is one of the strongest forces in real estate. It’s why beach houses, historic homes, and small, well-located communities tend to appreciate steadily over time. If you’re an owner in a scarce market, you’re sitting on an asset that’s naturally positioned to hold its value.
