Not just short-term rentals.

An Oct. 14, 2024, CBC Radio article, "Why some travellers are falling out of love with Airbnb," explains that, "as the price difference between hotels and short-term rentals shrinks [because Airbnb rates have increased], people are rethinking their options."

The article mentions that repurposing houses and condos as short-term rentals (STRs) negatively impacts housing markets, but it fails to point out that STRs are just one dimension of the housing crisis that repurposing houses and condos as financial instruments has created across the neoliberal economies.

A video embedded in the article explaining that changes to Quebec's STR rules have mitigated the impact of STRs in Quebec imparts the impression that, Quebec having successfully reined in STRs, the financialization of housing is no longer a problem there, which of course is not the case.

A Feb 09, 2023, CBC News article, "1 in 5 properties across much of Canada are owned by investors. That makes it harder for 1st-time buyers," reports that in BC in 2020, 16.5% of houses and 36.3% of condos were owned by "investors." (The Bank of Canada [BOC] defines an "investor" as "a buyer who takes out a mortgage to buy one property while maintaining a mortgage on another.")

Some holders have, obviously, repurposed these assets as STRs, but many have not and continue to rent them out instead as long-term rentals (LTRs); or they have sold their holdings, either to house-hunters or to other "investors."

As the Globe and Mail reported in a Sept. 10, 2023, article, "Investors account for 30% of home buying in Canada, data show," one obvious consequence of repurposing houses and condos as LTRs is that it distorts house and condo markets by reducing the "supply" of houses and condos for sale while at the same time distorting the apartment rental market by increasing the "demand" for apartments because households wishing to buy a house have to rent instead.

This is the framing according which most people living in the neoliberal world have been indoctrinated to think about housing prices. But there are other implications as well.

"Demand" by "investors" for houses and condos amounts not only to a number of bidders competing to buy these assets, but also to pockets deeper than those of a house- or condo-seeker who will pay to dwell in a house or condo as opposed to being paid by a tenant to hold it.

"Investors," in addition, by the magic of margin loans against their portfolios, have immediate, tax-free access to liquidity that the average house-hunter does not and can therefore outbid competing house-hunters in almost every instance.

These maximalist bids artificially inflate house and condo prices, draining dollars away from investment in economic activity that produces wealth and therefore funds important public services too numerous to list here.

They, the bids, do not just drive house and condo prices higher. They drive them parabolic. This results in two important consequences: first, that government, including the BOC, twists itself into a pretzel to prevent house and condo prices from correcting; and second, housing bubbles, which do not create wealth but concentrate it, eventually burst.

Governments propping up inflated house and condo prices maintain the illusion that fictitious capital held in the form of mortgages by banks, home equity by homeowners, and financial assets by "investors" is wealth and is not destined to disappear when the party is over.

When a housing bubble bursts, the fallacy of the rubric of "supply and demand" is laid bare for all to see because it is a mad rush for the exits as holders who had been waiting for a bigger fool to take their assets off their hands capitulate and dump their houses and condos for whatever they can get.

This has nothing to do with "demand" for housing. It is purely the result of a financial asset market running to the point where prices exceed the availability of liquidity and everybody bails. This includes homeowners whose mortgages cost more than the houses they are paying off can fetch and therefore walk away, which leaves banks holding both mortgages that are suddenly bad loans and houses and condos that no one has any money to buy because in a crash wealth does not change hands like it does when the bubble is inflating. It vanishes.

Massive central-bank injections of free money into a banking system that fuels housing price inflation with cheap mortgages; tax-free liquidity accessed via margin loans; renter and first-time-buyer subsidies (pass-through subsidies to house, apartment, and condo holders) propping up house, apartment, and condo prices; and the absence of regulation to force housing to be used exclusively as housing have produced Canada's housing crisis.

A housing crisis, by the way, upon which an enormous financial apparatus is predicated and thousands, if not millions, of Canadians operating on the delusion that money-for-nothing is a thing are feeding.

All of these problems can be solved. But first they must be understood.