Scarcity in my mind is a function of both supply and demand. Both low supply and high demand result in scarcity. In this case, supply and demand are both increa

Scarcity in my mind is a function of both supply and demand. Both low supply and high demand result in scarcity. In this case, supply and demand are both increasing, but one is way outpacing the other due to zoning laws. Even with perfect market efficiency, you still cannot make up for lack of supply caused by greedy home owners who don't allow any new constructions.