The high and rising rents in many of the nation’s cities are rightly provoking concern in many quarters. Across the country, as urban living has become more popular, many people are rightfully worried about being priced out of the neighborhoods they live in.

But in economic terms, high and rising prices are sending a clear market message: cities are valuable. More people want to access the advantages that cities provide, and in the face of growing demand we have a shortage of great urban spaces. The market is signaling that we need to build more and better city neighborhoods. Instead of discouraging developers from creating new housing, the most effective solution to this problem is to increase the supply of new urban neighborhoods.

Unfortunately, this won’t be easy: new cities and new neighborhoods aren’t built overnight; and those that already exist change even more slowly. In addition, creating great urban neighborhoods depends critically on the right public policy and public investment. Public policy –especially zoning – has to enable and encourage additional density and more mixed use development, not prevent them. In many cities, zoning restrictions, discretionary approval processes and excessive parking requirements—and now, potentially, new taxes on developer–makes new development difficult and expensive. To create livable communities increased density needs to be accompanied by additional public investment, especially in the form of transit and better alternatives to private car travel.