Agreed, but perhaps there is more than one reason? Does the impact of foreign investment account for the half million price tag of a 900 SF semi-detached bungalow near the Danforth for example (and one that has no land and needs massive renovation, to boot)?
Hmmm, it's hard to discern just what kind of impact foreign investment has on real estate price appreciation, but I'm sure it's substantial.
In the Danforth case you mention, no, it's unlikely that a foreign millionaire would want to park his assets in a 90 year old handyman's special, but it could be that people who value urban living are excluded from buying into a downtown condo development where he has bought ten units, so they settle for this house on the Danforth. Another, perhaps more plausible, explanation might be that there is a demand for inner city living that is not being met by two factors:
(1) our urban fabric - the part of the city that is urban, walkable and interesting - is not expanding. We are building a lot of infill within it, but we are not expanding the area of the region that is covered by urban fabric.
(2) the kinds of housing people want; stuff that isn't a shoebox condo (bought by the aforementioned millionaire, not to live in, but to park his rainy day funds), and is primarily ground-oriented and has a few rooms for a growing family - is in incredibly short supply, and nobody is building any more. The reason they may not be building any more is because the economics of land don't justify building semi-detached houses in the central city, when you could put up a highrise filled with 1BR units on the same space. On the other hand, if we expanded condition (1), we might actually be able to build these kinds of units in the neighbourhoods people want. Alas, builders north of Lawrence avenue have not figured out how to build non auto-centric housing (even if it's high density) and, more importantly, non auto-centric
retail strips that people who live in high density areas could feasibly walk to. In some cases, we have built the worst of both worlds: high density residential, but strip malls and power centres beside them, guaranteeing that a large number of people in a small area have to take the car, causing large congestion levels and undesirable neighbourhoods.