On the other side, letting housing to be crazy expensive, with few people capable of getting a new house, will always be profitable.
Yeah, and you probably also learned a laundry list of caveats which lead to the principle you're describing being non-applicable. Real estate is not a fully commodifiable good because it is non-fungible. A house in the middle of a city is not the same thing as a house 2 hours out of the city core. There is a limited amount of under-developed land to repurpose, and a limited amount of construction crews and machinery available at any given time to perform the work in question, so building production does not scale linearly with capital investment.
Construction has ALWAYS prioritized high-margin upscale dense construction where possible - if you own a block of rundown downtown shacks, you put a tower on it the moment you can. This isn't the issue - no one's complaining about Canadian Real Estate's ability to build a Class 1 commercial building or a high-end condominium complex. Toronto has been literally the number one city by crane count by a MASSIVE margin for years. The issue is how we can get widespread construction of low margin projects, Low-rise residential complexes, affordable housing, etc.
Because the margins are higher and you can't put up infinite towers.
>if they weren't focused on profit
They are.
Ah, but that's the thing about the free market. It doesn't care, for better or worse. If the barriers to building new houses are low and demand is high, new houses will get built and prices will drop until an equilibrium is reached.
>On the other side, letting housing to be crazy expensive, with few people capable of getting a new house, will always be profitable.
You seem to have conflated a free market with one consisting of too few people with a great deal of regulatory capture, where the criticisms you've mentioned here apply.
Technically houses are cheaper to build than in the past, knowledge and building materials are more plentiful, and capital markets are more efficient with more banks offering mortgages. So by multiple measures housing should be less of a problem, not worse.
This is the reality we've built by choice, people act like they don't know how we got here. If you go on Reddit they think if we all just became unionized and have more $$ we'd go back to the 1960s and all have houses again. But that problem with housing supply won't go away until we fix the root cause, throwing more wages (or gov money) at it without expanding supply will just increase prices further.
Some places have more or less run out of land. For example Vancouver is limited in it's north, west and south expansion by mountains, ocean, and an international border respectively. I believe there are similar issues in San Francisco, Seattle, New York, etc.
Indeed, higher density is the answer... I'm just pointing out that the increase in regulations is not the "only" thing that's changed.
No, the only difference is that a metric fuckton of money which used to be parked in productive equity investments ran out of productive uses because the taps were never turned off and started to slush into the real estate market via REITs.
The price of Toronto RE, for instance, has not tracked with regulatory costs - it has shot up shortly after the aftermath of 2008, when global capital watched Canada have one of the most stable real estate markets skip the fallout of the subprime mortgage crisis. Paired with the rock bottom cost of money, Canadian Real Estate was viewed as a particularly stable investment class, prompting both Foreign Investors and REITs to dump capital into the market. The value in the market is the fact that it WAS better regulated that the competition, but it's now a toxic asset class. No study that I can find indicates that the volume of regulatory costs associated with the Toronto or Vancouver housing markets can be attributed to the specific inflection points associated with our current pricing environment.
Wages cannot support the volume of leverage in the Canadian housing market. The numbers on display as reported by RBC yearly indicate that the average house in Vancouver costs more than 100% of the gross wages of the average worker in the city. This number is typically 30-40% in most functioning RE markets. So if consumer demand literally cannot create the numbers we're seeing, then we need to look at other systemic changes in the demand profile for the asset.
And it's pretty easy to see what's going on if you spend 2 hours calling brokers. Toronto condos aren't sold to people to live there; they're pre-marketed to block investors aiming to purchase groups of units for rentals and finance their purchases with rental cashflows - condominium sales come with rental guarantees for 3-5 years - even if the rental market crashes, even the speculative investors won't feel it until developers start to display counterparty risk issues to increasingly large groups of block investors. So why not leverage yourself to the tits? The entire market has to crater for your investment to fail to produce a return. The underlying cashflow supporting development of these units, rental dollars, don't actually need to exist for the investments to pay off (which makes sense, because they literally cannot as per the income/financing ratio described above).
Beyond this, REITs have a tax advantaged position in respect of other cashflow positive investment classes
The idea that regulatory burden is the cause of cost increases of this magnitude is lunacy.
Why aren’t they building these homes? How are they being stopped? Typically the thing that is stopping homes from being built is governmental restrictions on how many homes can be built (ie zoning laws).
People can only 'let housing be crazy expensive' when they can prevent others from supplying the market, which is only possible by wielding power, usually through the government. Which is what we have now.