Here is a chart that we have all seen many times before. This one is from a recent New York Times opinion piece called, "America Needs to Build More Housing" and it shows the relationship between home prices (the price-to-income ratio) and houses built (average housing starts per 1,000 households). In this scatter chart, the four quadrants are as follows:
Cities that don't build a lot of housing and are expensive (San Francisco)
Cities that don't build a lot of housing but are still relatively affordable (Chicago)
Cities that build a lot of housing and are affordable (Austin)
Cities that build a lot of housing but are still relatively expensive (Hilton Head Island)
This last quadrant has the fewest number of data points and a number of the locations are resort or second-home destinations, which have their own unique market dynamics. Similarly, the lower-supply cities, like Chicago and Detroit, have managed to maintain some degree of affordability by virtue of the fact that their population and economic demand haven't grown as quickly as in other cities.
But generally speaking, the correlation is as one would expect: more homes equals lower prices. It is, however, worth pointing out that not all homes are created equal. The cost and time required to build a low-rise, wood-framed house in the suburbs is not the same as building a high-density, reinforced-concrete tower in the city.
Still, we know that all forms of supply ultimately improve affordability in a market. With this in mind, how might one describe Toronto today? We've been told we're in the midst of a housing crisis, and yet there are lots of available homes on the market, both to buy and rent. Indeed, it's a buyer's and tenant's market. So what's going on?
Well, it's important to keep in mind that a chart like this represents a long-term historical average and that building new housing generally takes a long time (too long, I might add). Right now, we could describe the Toronto housing market like the proverbial "pig in a python."
The market is in the midst of absorbing a huge influx of completed supply and, as our chart suggests, this is having a deflationary effect on home prices in the short term. However, once this pig gets digested, there's absolutely nothing next in the pipeline to digest, and according to basic economics, we know exactly what that will mean for the market.
Cover photo by Artem Labunsky on Unsplash
Chart via the New York Times
It seems like just yesterday that people were protesting Uber for disrupting the traditional taxi business. Now the question has become: are AVs about to disrupt Uber?
Over the last six months, Uber's stock price has declined nearly 19%. At the time of writing this post, its market cap is around $155 billion, compared to Waymo's private market valuation of $126 billion (though I'm sure many would argue this is a wee bit high).
The market seems to think that self-driving cars are a two-horse race between Waymo and Tesla. If this is true, what role will Uber play?
Uber has naturally tried to assuage concerns. Alongside their Q4 2025 earnings, they published a 13-page "spotlight" on AVs, where they argued, don't worry, everything is fine:
AVs will change how trips are supplied, but not how demand is aggregated. History suggests that over time as supply fragments and technology commoditizes, the platform that can bring the highest utilization to assets, and superior reliability to customers, will capture a large share of value. That is the role Uber is set up to play.
One of the arguments for this is that rideshare demand is highly variable throughout a week. A typical Monday can be less than half of a Saturday night, and daily troughs can decline to something like 5% of peaks.
So, if you try and service this demand variability with only AVs, you're going to have a lot of underutilized vehicles during off-peak times. This makes sense to me right now, but I'm not certain it will persist or always matter as the space evolves.
When Uber sold its AV division in 2020, I understood why (to try and reach profitability), but it always felt a little unsettling to me. AVs were very clearly the future — are you sure you want to sell this off?
Now I suspect they'll have to re-enter in a meaningful way. They're going to need to do it as long as the market continues to believe the current narrative.
I use Uber on a regular basis, but I already have the Waymo app on my phone (I downloaded it on a long layover in SFO where I contemplated a joy ride). As soon as rides become available in Toronto at reasonable prices, I wouldn't think twice about switching.
Cover photo by clement proust on Unsplash
Stock graph from the WSJ
Demand chart from Uber Q4 2025 Earnings — Autonomous Vehicles Spotlight
One of the big housing stories of this year was that Austin has built a lot of new apartments and it is now causing rents to fall precipitously — by as much as 22%. The market is working.
But as we also talk about on this blog, the benefits of new "luxury" housing don't just apply to those who can afford it. Since real estate development happens on the margin — in other words, it's based on the feasibility of the next unit of housing supply, not an average for the market — new market-rate housing typically needs to cater to the top end of the market. Otherwise, it wouldn't be economically feasible to build it.
However, study after study also shows that the delivery of any new housing in a city broadly tempers rents, including in a city's oldest housing stock. This is true in virtually all cities:
The above chart is from this recent Bloomberg article, talking about how "luxury apartments are bringing rents down." But if you look closely, there is one city on this chart that appears to be an outlier: Miami.
Despite adding a respectable number of homes, rents have not fallen as much as you might expect given the figures for the other cities on this list. The intuitive explanation is likely that Miami is in the midst of experiencing an extraordinary wealth transfer.
For the five-year period through to 2022, it was estimated that some 30,000 New Yorkers with combined annual incomes of $9.2 billion moved to Miami-Dade and Palm Beach counties. It's also an important capital safe haven for Latin America.
I vividly remember looking at condo listings in Miami in 2008 and thinking, "Damn, this is cheap!" I even tried to find a job there after grad school, but at that time, it was no place for a new real estate developer. My best bet would have been something in loan workouts.
Who could have predicted such an incredible transformation? It isn't the third most important global city in the US according to the numbers, but it certainly has a lot of momentum right now. In this instance, new supply does not appear to be more than offsetting demand.
Cover photo by Valeriia Neganova on Unsplash