I think part of the inflation for COVID and earlier is a desire to get out of the city.Yes, we have an under-supply of housing. I completely agree with you. But it's nothing new and certainly not responsible for the price increases since COVID.
Add declining interest rates, and we've seen house prices increase as people budget the mortgage payment.
So with the increase I think people are holding onto their in city property because real estate has "done well".
My house value has almost tripled in a decade, I understand the emotional desire to hold on
Also we've been underbuilding for decades, so there isn't much slack to pick up the variations in demand.