Quote:
Originally Posted by calculoso
It is being eaten up all the time in the GTA and has only contributed to pricing increasing as (IMO) investors snap up new builds before real people can even look at them. The investors look to multiply their money during build (invest small deposit and sell for market rate) instead of a real family being able to buy at the lower pre-build price. Instead of a family being able to buy a house for $500-800k, they must pay the post build $1.2-2.0m+ prices. More supply won’t necessarily help, unless there are restrictions on who can buy (etc) - more red tape, not less.
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I mean the bolded just isn't logical. If you increase the supply of something the price is lower than it would be without that increased supply, that's the first day of Econ 101.
However, when generations of people believe that housing can only go up demand becomes pretty inelastic and you get people buying on speculation. The easiest way to stop that would be to have a housing crash of epic proportions (US 2008-2009 style) but obviously there would be lots of collateral damage from that. The government has been trying to engineer a soft landing for housing for a long time, but national policy is a bad way to do that.
The 2nd tier cities don't need tighter CMHC rules and higher interest rates, and Vancouver and Toronto do. But supply and demand are local - if you added a bunch of zoned land supply to the 2 over valued cities you'd eventually see a price response.
Edited to add: more supply doesn't need to mean endless miles of cookie cutter suburbia. It means adding more land and then building complete neighborhoods with a variety of built forms. It also means making re-zoning to higher densities more feasible.