Also why won’t those homes enter the long term market?

Not sure if he says so because of this, but property owned specifically the short term market attracts very different investors. Short term market = quick gains, that kind of investor may want to sell it as soon the price is right, and put their money in other high risk high gain markets like venture capital. Long term market = slow growth. This is interesting for investors that also look for government bonds. They will likely want to hold it for as long as possible.

The more scarcity on the housing markets, the more extreme the demand. Building more houses is only financially interesting for the people who do not own a house, since decreased scarcity leads to lower (perceived) value. The real problem is the people with greed have more power than the people in need.

In Portugal and I assume many other countries, if you have a bad tenant, like someone who does not pay, it often takes more than a year in court so you can evict them(sometimes multiple years) , also you can have your house “destroyed” and will be hard to get your money back, so many people who own second homes just don’t put them in the rental market.