An overflow of housing investors, domestic and foreign, threw off the usual laws of supply and demand. The harm done to Vancouver has been 'extraordinary,' say researchers. Still, the debate won't die

The chart in the University of B.C. study startles in the way it shows how Vancouver has suffered in regard to housing affordability compared to 50 large U.S. and Canadian cities.

The chart shows that over six decades, Vancouver built new housing supply faster than almost any other major city on the continent — but still endured the most rapid rise of all in unaffordable housing.

The UBC authors of the report, Patrick Condon, Thomas Kroeker and David Ley, say their findings counter arguments of many provincial and civic politicians as well as the housing development industry that “abundant supply” is the key to easing housing costs.

In light of overlapping provincial and municipal elections, this debate remains central to B.C.’ s future.

Every member of Vancouver city council, plus other B.C. mayors and councillors, have shown their fealty to the concept that “supply, supply, supply,” combined with deregulated zoning and fewer restraints, will make housing more affordable.

There are civic exceptions to the YIMBY (yes in my backyard) campaign, like the mayors of Richmond and Burnaby. But B.C. NDP leader David Eby has been a booster.

In contrast, the UBC authors found that, in North America’s biggest cities between 1961 and 2021, “rising supply correlated positively with unaffordability and with increasing housing values.” And nowhere was that correlation more “extraordinary” than in Vancouver.

The authors argue there’s a little-known factor that undermines the concept that more supply cuts the cost of a commodity, whether they be oranges, fertilizer or housing.

It is the huge role investors and speculators, individual and corporate, domestic and foreign, have played in housing.

Before saying more about their study, it’s worth taking seriously the traditional argument for increased supply.

Chris Auld, an economist at the University of Victoria, is one who believes increasing supply does make housing more affordable.

“People like David Ley and Patrick Condon see prices and quantities increasing together and conclude that increased supply of housing doesn’t decrease prices!” Auld said.

“This is a special case of confusing correlation and causation: The fact that more housing supply is in this case correlated with higher prices does not (mean) supply causes higher prices.”

Demand needs to be taken into account, Auld says. In cities like Vancouver and Victoria, he said, rapid population growth led to “new entrants, or wealthier incumbents, bidding up the price of the housing stock.”

Auld points to a 2025 paper by law professor Christopher Elmendorf, of the University of California Davis, and others titled The Folk Economics of Housing. The article explores why the public is not more enthusiastic about the pro-supply argument. “Perhaps publicizing the incredible success of zoning reform in Auckland, New Zealand, would start to change hearts and minds.”

Yet others have found holes in the widely publicized paper on Auckland by Ryan Greenaway-McGrevy on the benefits of upzoning to increase housing supply and decrease costs.

Australian scholars Cameron Murray and Tim Helm have pointed to methodological problems. They maintain the modest increase Greenaway-McGrevy found in housing activity can be attributed to normal “boom and bust” cycles, and didn’t really link to lower prices.

In an interview, Condon agreed with Auld and the industry that demand for housing, including from international migration, needs to be fully taken into account to understand price fluctuation.

But Condon said the UVic professor’s argument is only “true if you also acknowledge that this demand is not based on the wages of people who work and earn a living here — (it’s not based on) what they can afford to pay for housing, without access to ‘the bank of mom and dad.’”

The  demand, says Condon, has come from the phenomenal way North American housing became a supposedly safe investment asset. “It’s the global enthusiasm for our real estate that is the real demand — and the biggest component of that asset value is urban land, not the building itself. In the end it’s all about the dirt.”

In contrast to the YIMBY camp, Condon, Kroeker and Ley maintain the first thing their study shows is that, across the 50 Canadian and U.S. cities, there actually has not been a shortage of housing. The pace of house construction in these cities, they say, has largely kept up with demand from population growth.

Just as important, the authors conclude that “the extraordinary decoupling between home values and income in most cities draws our attention to the role of investment capital, rather than income, as a significant price driver in many markets.”

Their theory bears out in Metro Vancouver, where in the past two years prices have finally begun falling, as international migration has dropped and, in parallel, investors, global and domestic, have backed away.

More than 8,000 condo units now sit unsold in Metro Vancouver, and 132,000 housing units have been approved across the region that are not yet being built. 

As long as politicians insist “more supply” is the only solution, while ignoring demand from investors, their housing policies will keep missing the mark.