This is very utilitarian view. Quite probably purchasing zucchini at the market is cheaper than home growing few plants, yet to some people having home-grown zucchini (or apple, grape, onion whatever) is the goal. There are many properties of a property (pun intended) that different people value differently. Density is one of the factors and some people deliberately seek properties in low density areas. Each additional restaurant, each additional piece of property can be seen as destroying the fairy tale world.
Compromises can only be found where all parties are to gain something. If one group are to gain something - housing in this case - and whatever they can offer will reduce negative impact to others - local residents - there is simply no compromise to be found because whatever the state of neighborhood was when they moved in, it was the best compromise in their view.
"no compromise to be found because whatever the state of neighborhood was when they moved in, it was the best compromise in their view"
But the radius within which homeowners gain is wider than the radius in which homeowners bear inconveniences (e.g. shade on their garden). So of course it's rational for a homeowner to be pro commercial development in their city and near their neighbourhood (as it would increase demand for housing, and hence increase property value), but against commercial development near enough to affect traffic and noise levels.
There is a problem with the mystic rational consumer, because theories assume that core goal of every market participant is to increase value. Taking actions toward increasing property value are only rational with intention to put the property into market. Without such intentions (e.g. owner plans to spend the rest of their days there) owner's interest is in keeping the property (and the neighborhood) as it is, maybe even decreasing real value.
While increasing property value may seem rational to probably the majority, but given certain circumstances, preferences and goals the opposite can be easily argued to be rational. With modern metropolis lifestyle of changing home every some years based on workplace location, family size, etc. one is always in the market and increased real property value is quite favorable economically. For some groups changes in property value are seen as irrelevant in face of non-economic values.
This is interesting but is tangential to my point: compensating NIMBYs isn't a viable strategy.
OT, but:
"Taking actions toward increasing property value are only rational with intention to put the property into market"
No, even if you intend to die in your current home, increasing property values are great if (i) you can borrow against the value, to fund current expenditure and (ii) property taxes don't go up as a result (yay California).
"lifestyle of changing home every some years based on workplace location, family size, etc. one is always in the market and increased real property value is quite favorable"
I think that depends on whether you're trading up or trading down. If you want to buy a place double the size of your current one (e.g. to raise a family), then you'd want prices to be lower. As the differential between the sale price of your existing home, and the purchase price of the new one, would be lower.
> even if you intend to die in your current home, increasing property values are great if
Exactly, certain things can be argued to be either advantageous or disadvantageous, depending on mindset/worldview, focus duration (long-term vs short-term goals), focus population (single individual vs average/median of population), etc. and these are core to public policy making.
And that is my point: attempts to maximize quality of life for a single individual/family for a few years naturally lead to NIMBYs. And they are not inherently wrong - annoying with different focus (e.g. median citizen after few decades), but not wrong.
Compromises can only be found where all parties are to gain something. If one group are to gain something - housing in this case - and whatever they can offer will reduce negative impact to others - local residents - there is simply no compromise to be found because whatever the state of neighborhood was when they moved in, it was the best compromise in their view.