What is economic scarcity in relation to land?

Economic scarcity in relation to land refers to the concept that land is a limited resource, and its value is derived from the demand for it versus the available supply. As populations grow and urban areas expand, the demand for land increases, which elevates its value. This phenomenon highlights the principle of supply and demand; when more people desire a limited quantity of land for residential, commercial, or agricultural use, the value increases due to scarcity.

Understanding this concept is crucial in real estate, as it explains why land in prime locations often commands high prices and why different areas may have varying values based solely on their accessibility, desirability, and availability. Therefore, the perception of land's value is significantly influenced not just by its physical attributes but also by the competition for its use, leading to the conclusion that demand for land creates its value.