When controls and regulations fail, institute more controls and regulations.

Imagine we doubled the supply and everyone had access to a unit that does not include 250k of built in regulation cost built in (municipal and provincial levies, development charges, education charges, HST, tarion, ontario land transfer tax, etc, etc. etc.):

1) First every new unit would be significantly cheaper (more affordable)
2) Investors and speculators would not be able to “monopolize”

How can there be no shortage of supply?

How many families living in condos downtown? how many freehold semis avaialable or even townhomes?

Only a very small percentage of condo dwellers trying to move up into larger properties is already generating huge pressure. Most have to move outside the 416/905 and many even out of the GTA.

There has always been a short supply of certain types of units in desirable areas, but now it seems there is a shortage of supply of most units in most areas

Correction…

Bank – “here’s 1 mill, keep it for 5 years for free…then when you have to renew as we know you’ll be stress tested and can’t go anywhere else we won’t give you a competitive rate but the posted rate plus as we can pretty much charge you whatever we want since you won’t be able to qualify anywhere else. This will seem like we’re jacking up your rates pushing you into insolvency but it has nothing to do with us. Blame the government we’re only the messenger.”

every one here knows that shortage is manipulated by so called REALOTORS , BANKS and our Bank of Canada governor., to keep the country afloat during pandemic as virtually all industries are on halt since last one year..

So question arise , in this time where prices are so much high compare to last year, naturally all investors trying to sell their investment in real estate to get the maximum return.. so that means current buyer in the market seems genuine buyer ..if they are genuine buyer then why they are paying thousands of more dollars on over asking … This some how translates that there is really a supply shortage ?? because genuine buyer who hard earns money seems thinks twice before giving thousands of over asking..

so supply demand equation may be right or may be wrong.. it is hard to understand from end buyer perpective..

The pandemic did not blow a hole in the immigration narrative.

Immigration was down but interest rate cuts combined by low inventory (induced by the pandemic) picked up the slack.

Just because factor A temporarily picked up the slack for factor B, does not mean that factor B wasn’t or isn’t an issue.

Immigration, refugee, and TFW intake has exploded since 2015, with the added demand greatly contributing to pushing up prices prior to March 2020.

The pandemic blew a hole in the immigration narrative a mile-wide. Near-zero immigration and rapid price acceleration. The data points to average house-greedy Canadians driving broad price inflation, not immigrants.

Counter-points

– increasing Canada’s population in any drastic amount won’t happen with high property prices. Many immigrants are already skipping Canada due to housing-related concerns, and if it keeps going up it’s only going to get worse. Contrary to popular belief, there is not an endless pool of wealthy individuals that will come, it’s mostly working class people that need affordable housing.
– not all homeowners want prices to keep increasing. In interviews with a lot of Canadian homeowners they are alarmed by high prices, and not universally supportive of the price acceleration. For example, anyone with kids would logically want prices to be reasonable so their children can afford to live here. Not all homeowners only care about themselves (though some do).
– There is going to be a shift in our lifetimes in politics from house-heavy boomers to housing-starved millenials. As that happens, expect to see a shift in their priorities. There is not an endless appetite from a policy standpoint to keep the ponzi scheme going. It’s already becoming more politically popular to attack sacred cows like the primary home tax exemption, and more aggressive taxation on speculators and high net-worth individuals. That trend is only going to continue.

Either the bubble is going to pop on its’ own, or it will pop in the years to come due to increasing scrutiny by all levels of government regarding productive use of Canadian land. The housing market is on borrowed time, it’s a matter of when, not if.

More supply would help in a way… but whenever a mean reversion in investment demand happens the unnecessary extra supply will cause an over-correction on valuations (aka. housing correct to below fundamental prices). The goal should be to restore housing to a reasonable multiple of local incomes and rents. Too much supply undermines that goal.

The best pragmatic approach is multi-pronged: more purpose-built rentals, strong disincentives for price speculation, and yes some strategic increase in supply.