Earlier quoted context omitted.
> The scarcity of houses is real and physical Not really in a lot of cities, most scarcity is based on government regulations (=not allowing more of them to be built, or not allowed to build larger ones). There are a few locations where there is no actual usable space to build more, but mostly, that is not an issue.
The scarcity of land is physical. And to supply more housing you need to pay for the ownership of physical assets, and then for people to physically demolish them and physically build bigger structures, which is a lot of expensive to take if the demand for property doesn't already exceed its supply Or you could create more "limited edition" monkey pictures at essentially zero marginal cost.
There are a lot of places where there is enough land to build more and more, but the governments don't allow it. And there are also places such as san-francisco, where replacing single-family houses with apartment buildings would solve a lot of the housing crisis, but the government (and NIMBYs) don't allow it.