Without making any judgement on the issue, this will probably mean a general reduction of housing prices, and hence a bunch of people going underwater, no?
The basic things everybody needs are food clothing and shelter. How is it a good thing that something everybody needs should get more and more expensive? I think the relative amount I spend on food and clothing has dropped over the past 25 years, but my housing expenses have skyrocketed.
Landlords do not get rich in the manner you insinuate. They get wealthy in the very long run. But not rich.
Toronto cap rates are hovering around 4-6%: in other words they are BLEEDING cash from the landlords' own pockets.
Another investor will not buy for a higher price unless the rents also increased (ie: cap rate is in a certain acceptable range)
The statement "...property doubles in value but I don't increase my rents...." Is misleading since presumably no sane investor would pay double price for the same income stream. If the cap rate is 5% for a 1 million dollar property then it earns 50k per year. The property price that other investors are going to pay will be a function of a cap rate they are OK with ( which bakes in the price and earnings ratio). 2.5% cap rate means 2 million dollars still earning 50k year. No thank you
Additionally, the equity in an investment is not wealth... yet. It has to be sold to get money that can be used to put food on the table.
I totally agree, I'm just trying to understand the ramifications.