An interesting take awhile back on this exact issue: https://jbconsulting.substack.com/p/on-shelter-futures-part-....

The fear (now largely realized) is that increasing interest rates mechanistically drive up inflation (because of how the price index is calculated in Canada), which the Bank of Canada combats by...raising interest rates.

Includes a good discussion of just how potentially screwed the housing market is.

(Also an interesting example of a market where "prices expand to fill the available money", which I have a hunch is a good indicator of a supply-constrained market).