Hmm, can your example really be called an externality? Real estate price rises as a reaction to the economic activity in question? I'd say it fails the definit

Hmm, can your example really be called an externality? Real estate price rises as a reaction to the economic activity in question? I'd say it fails the definition "cost or benefit that affects a party who did not choose to incur that cost or benefit", particularly at the part "party who did not choose to incur". Finding prices higher in an area, when choosing to purchase or not purchase, doesn't match that IMO.