<story><title>Toronto Is in a Housing Bubble</title><url>http://www.greaterfool.ca/2017/03/04/its-official-its-a-bubble/</url></story><parent_chain><item><author>martinald</author><text>Is there any city that is actually managing to provide enough housing inventory these days? SF, London, NY, Vancouver, Toronto etc - all seem to have low inventories.&lt;p&gt;Is it simply that there is a multiyear lag before inventory starts coming on stream, or is there some fundamental reason why these larger cities can&amp;#x27;t provide enough housing?</text></item></parent_chain><comment><author>patrickaljord</author><text>Zoning laws and building heights restrictions and other regulations are to blame. Basically, it&amp;#x27;s hard to provide enough inventory when doing so in a way that would help (build more buildings and higher ones that can receive more people) is illegal. Why do such regulations exist? Several reasons:&lt;p&gt;* nepotism, current owners want to keep the inventory low so the price of their property and demand remain high&lt;p&gt;* nepotism, because owners are afraid tall building will make their city less appealing and lower the price of their property.&lt;p&gt;* silly zoning laws, because many believe central planning is actually a good thing despite the ridiculous amount of evidence that it doesn&amp;#x27;t work.&lt;p&gt;* simple inertia, bad laws and regulations are created all the time but almost never repealed.&lt;p&gt;I&amp;#x27;m probably missing a few other reasons I&amp;#x27;m sure others will point them out.&lt;p&gt;Also something worth saying, owners love to say that adding taller buildings and more buildings and people would kill the spirit of the city. But preventing new buildings has a effect of super high prices that makes it impossible to live in the city, in the end only billionaires can buy homes as investment and don&amp;#x27;t even live there while the few other building are rented to a few lucky high salary people which creates tension with the rest of the population. So you get a city full of empty houses, super rich people, high salary folks and regular people who are getting kicked out. Real people start living outside the city and its spirit is gone anyway.</text></comment>
<story><title>Toronto Is in a Housing Bubble</title><url>http://www.greaterfool.ca/2017/03/04/its-official-its-a-bubble/</url></story><parent_chain><item><author>martinald</author><text>Is there any city that is actually managing to provide enough housing inventory these days? SF, London, NY, Vancouver, Toronto etc - all seem to have low inventories.&lt;p&gt;Is it simply that there is a multiyear lag before inventory starts coming on stream, or is there some fundamental reason why these larger cities can&amp;#x27;t provide enough housing?</text></item></parent_chain><comment><author>tmnvix</author><text>I&amp;#x27;m not convinced that all of these places are suffering a shortage of accommodation (a shortage of property investment opportunities, certainly).&lt;p&gt;It&amp;#x27;s worth remembering that a speculative boom creates extra demand.&lt;p&gt;As far as I recall it was almost universally accepted that Ireland had a shortage of supply ten years ago. Then the GFC happened and it very quickly became apparent that the shortage was of investment opportunities, not homes.&lt;p&gt;EDIT:&lt;p&gt;For some actual data related to this phenomenon, consider the Speculative Vacancies Report[0] published each year by Melbourne group Prosper Australia. Melbourne is, like many major anglosphere cities (London, Sydney, Vancouver, Auckland, etc), suffering something of a property price crisis. Each year Prosper Australia determines which Melbourne properties are vacant using water consumption data provided by the city&amp;#x27;s water utilities[1].&lt;p&gt;If you accept the narrative that is usually presented in the media; &amp;quot;prices are high because of a shortage of homes&amp;quot;, then you would expect areas with the highest capital gains to be closely correlated with the areas that have the lowest vacancy rates. In actual fact the correlation is unintuitively the other way around - the areas with the highest capital gains have the highest vacancy rates (approaching 30% in the case of Melbourne&amp;#x27;s Docklands area).&lt;p&gt;[0] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.prosper.org.au&amp;#x2F;2015&amp;#x2F;12&amp;#x2F;09&amp;#x2F;speculative-vacancies-8&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.prosper.org.au&amp;#x2F;2015&amp;#x2F;12&amp;#x2F;09&amp;#x2F;speculative-vacancies-...&lt;/a&gt;&lt;p&gt;[1] Compare with the method for determining vacancy rates that is typically reported in the media: asking property managers what proportion of properties on their books are currently vacant.</text></comment>