While I didn’t follow the news closely, this seems to have come from the Vancouver and Toronto real estate markets. City level laws might have been tried but they lack teeth. This issue is also leading towards a vacancy survey and tax for vacant houses to provide material to escalate (I feel) if necessary.
And worldwide, people might want cheaper housing but they din’t want their own house value to decline. The former occurs in the neocortex while the latter seems to lie deep in the lizard brain.
It’s a fine investment in a diversified portfolio because traditionally it was a hedge in both capital and monthly cash flow, and decoupled from other asset classes. It also offered freedom where you can make improvements to the land to increase the rate of growth. There were also non-monetary investments because your lifestyle choices had certain kinds of freedoms it offered (in exchange for giving up others)
So it’s definitely a good investment when it’s affordable. In current environments, it’s actually less of a good investment than how it used to be used (stable, inflation-protected hedge) because it’s more in the asset class of stock and intertwined with other asset classes. That’s good for you on the upswing (which is why you think it’s incompatible with affordability) but not so good on the downswing. Also high volatility and even rapid growth isn’t something most people look for in housing and housing-related costs. In other words, people now treat housing stock the same way as company stock which does make it incompatible with affordability but it’s traditional role is a hedge in your portfolio.
As I understand it, a good investment portfolio is one that increases in value faster than inflation. A single investment though can be at inflation or even generate slight negative returns if it's role is as a hedge to sacrifice some of your overall upside to limit your downside risk. Did I get that wrong?
Housing is also pretty unique in the range of investment options available to "normal" people in that you can get meaningful leverage without some form of collateral posting/margining requirement or ongoing covenant testing.
I don't think there is much in the literature to suggest that increasing the zoned capacity will lead to significant declines. All I've seen is that such development will instead curtail the significant gains that march past local median wages, which seems like a good thing even if you are a homeowner, unless you identify as a Scrooge McDuck with no empathy for your friends and family or people in your community.
Given that most developers charge a premium over the local market, modest development increases average prices. The bigger problem is it makes existing property look less shinny and new. New buyers are typically richer, or at least more liquid, to be able to afford to pay upfront for the property growth that the existing properties have achieved.
And worldwide, people might want cheaper housing but they din’t want their own house value to decline. The former occurs in the neocortex while the latter seems to lie deep in the lizard brain.