Such a weird rationalization.
Even very non-economist me "knows" that small changes in supply (<1%) leads to big changes in price. Either up or down. More so when factoring demand.
Some things add friction to efficient price discovery, like rent control and landlords servicing debts. But the first order factor is supply and demand.
Right?
I've read stats that indicate that nearly 20% of home owners in the Toronto area own at least one additional "investment" property. This rings true with my own experience, as the cult of home ownership is ridiculously strong in Canada, and many have been betting on and fueling rampant speculation for the past decade -- buying boxes in the sky for hundreds of thousands of dollars under the assumption that real estate just keeps going up.
But the anecdotal stories about the occasional foreign buyer is somehow much more satisfying and comforting than the thought that Canadians are also responsible.
Core problem is housing shortage. We need more. I don't care how we get there. So I support upzoning, MIL units, penalizing unused (vacant) units, and any other idea for increasing supply.
We just need to figure out what policy mix works. The blame game is just a distraction by the incumbent players.
To give an example of how exaggerated it is: before implementing the empty homes, the city of Vancouver estimated that 25,000 homes were empty. The final result: only 2,500, one tenth what everyone thought.
Demand curve is number of houses available for sale, supply curve is people looking to purchase those homes. As the curves shift, if the price goes too high, then the lack of supply of people with sufficient money would cause prices to stall or come down. But it’s apparent that the supply of people with a lot of money (or credit) is a lot higher than the supply of houses.
Maybe it’s even more accurate to say that the supply of inflation protected assets in stable societies is in low supply compared to the supply of capital trying to buy those assets.