In something at least vaguely resembling a free market, detached homeowners such as me would have to compete with other land use that generates much more utility, and thus income from rents, on the same land area, with something like a high-rise. But I am insulated from that, by laws that effectively entrench the upper middle class's preferred land-use pattern of detached suburban housing. Zoning bylaws that prohibit constructing anything else effectively subsidize the suburban lifestyle.
[1] http://www.datalabto.ca/wp-content/uploads/2019/07/toronto-0...
* Foreign ownership * Greedy landlords * People who own more than one house * AirBNB * etc etc
When the solution is much like you just said, it's a policy decision that is limiting the housing supply (well that plus record population growth in the GTA). https://www.scotiabank.com/ca/en/about/economics/economics-p...
If people spent half the effort on holding their provincial and muni reps accountable for this rather than belly-aching online about all the other items I listed above (which are really symptoms not causes) maybe something will change.
It's not a free market. Look at how hard it is to get land and approvals to build new housing.
If we had a truly free market in housing, we wouldn't have these problems. High prices would incentivize more construction which would bring down prices.