They openly advertise on the side of the buildings that x% of units are already sold while there's barely a frame up.

If enough housing was being built, then the expected return on houses would be negative and investors wouldn't be buying them.

You're ignoring the fact that most of the new supply being purchased by investors means they have more power to increase rents, re-leverage their existing real-estate and buy up more. Continuously increasing real-estate prices and rents until the bubble bursts.

If everything worked based on the most basic econ101 principles, we wouldn't have any bubbles in the first place.