You think if there were modern highrises in Menlo Park a tiny 2BR shack next door would still sell for $2M? It’s a supply and demand issue, nothing more.
What is your mental model for this then? If the "2BR shack" can be built from scratch for 300k, and the value for the lot + shack is $3M, then the land value is $2.7M. Most expensive real estate is land value, not actual structure value.
I see what you're saying, my point is that the principle thing driving it's value isn't the land nor the shack, it's the regulatory framework of the area.
Yes, it would go way, way, way up because if there is a high rise next door someone wants to knock down the shack and put up another high rise, a commercial building, etc.
