Quote:
Originally Posted by topfiverecords
Theoretically, however in a world where new residential construction margins can be low, and previous sale comparisons keep price and seller's expectations up, IMO it takes a drop in buyers to below 0 for prices to dip far enough to the length we need.
Sure, if supply increases and you reduce interested buyers from 15 to 2, you lower bidding up on properties, which will bring prices and comparables down somewhat, but stuff will still sell in short order at prices comparable to the last string of sales. You just need one buyer per property and it's still a seller's market so low offers don't close deals.
You need a period of time where properties begin to sit on the market, and then price expectations get adjusted. In order for that to happen we'll need people to stop moving here in the numbers they are, because we won't be able to tip the other way and build more than 1.0 unit per family moving here. We'll always be in a deficit for quite some time.
Then as soon as values drop due to lower demand, developers stop building because construction costs are still the same (now higher than the beginning of this conversation) and they stop building because they don't make money, or even lose money over holding costs of finished product.
Agree with you on this benefit, but it's probably a complicated study to determine the trickle down impacts on affordability. In a perfect world, someone would move up to the $700k townhome, and everyone would move up a $100k tier below that leaving open a $400k house or $300k condo adding to supply at that end of the market. However, you probably have people downsizing from their $1.0M house, and people moving here trading across their $2M dilapidated house in Toronto.
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Housing policy isn't meant to address immigration/migration.
You've said yourself, having more houses relative to buyers drops prices. That's it. The more we enable people to build, the more we'll see prices soften, exactly as you said.
Sure immigration could negate that, but the same levels of immigration without increasing housing supply would make the situation even worse.