While life might be simpler with your model, it doesn’t fit reality well.
Here’s a decent analysis of the California situation with mismatched supply and demand and the headache that goes along with the state’s governance: http://www.latimes.com/business/la-fi-home-prices-20170725-s...
> High prices (demand) attracting speculation (supply) should drive down rents (prices) ... [but they're not]
Should? Then why aren't they?
> new buildings are regulated through zoning and permits.
In reality Antarctica is freezing cold and difficult to get to. And in reality there is a shortage of places to build new housing at an affordable price in either location mentioned.
yes, and AirBnB has built a business off ignoring those pesky laws.
(Though I could see people buying vacation homes, status homes, etc. doing this)
If you were to let renters use that property and they don't take care of it properly, you'd have lost a lot of money. It's often just not worth the effort for these people.
Or you just sit and hold it. Maybe send in a cleaning and maintenance crew every once in a while to keep the dust at bay. Much less headache than renting.
Personally I'm inclined to be in favor of these protections, but I can also understand a wealthy investor wanting to take the hit of leaving the place empty to avoid these kinds of troubles.
Property tax acts as a stick to put property to productive use rather than just sit on it, otherwise the USA property market might be as dysfunctional as china’s.
It is expected that the Chinese government will eventually abandon the land lease system and replace it with a property tax one. But they won't do so until the current bubble pops.
Remember that renters can block your ability to convert the property to something else, as you can't instantly evict them, so the value of the property can be higher the more empty apartments there are.
In cities where there are businesses on the bottom floors, and apartments above, they sometimes only rent out the business spaces, as they lack the same level of legal protection from short term evictions.
http://kalw.org/post/growing-number-san-francisco-landlords-...
https://sf.curbed.com/2017/7/12/15961486/sf-tax-landlord-hom...
https://www.theatlantic.com/business/archive/2011/05/empty-a...
We saw this during the housing bubble: rents were detached from the price of housing and stayed low.
The problem here is that short term rental brings more revenue than long term rental. Before Airbnb you had to be a hotel to offer short term rental, so most landlords stayed out of that business and stuck to long term rental even though there's less revenue per unit.
But with Airbnb you can take your units out of the long term rental pool and put them in the short term rental pool, and because regulation has been slow to catch up, you don't have to take on the regulatory burden of being a hotel to do so.
Fewer units in the long term rental pool obviously, then, causes rents to go up.
Given that Airbnb makes units more valuable (by converting them to short-term rental and increasing the expected cashflow), they would of course then be more attractive to investors and that is perhaps part of the increase in housing prices in Vancouver. But even in that case the causality is increased rental cashflow driving up prices, rather than vice versa.