Or the owners of those 100k units that are just left to rot can accept that their "investment" can't (and shouldn't) make them money faster than inflation, and lower the asking price.
The scenario you describe only exists because the number of "investors" buying up properties to flip and turn a profit vastly outnumbers the number people looking to buy their personal residence, and have the skills and disposition to fix it up themselves.
And judging by the build quality of a lot of flipped properties, the investors don't have the skills or disposition either.
I think we are conflating Private Equity, small-time house-fixer-flippers, and vacation homes.
I think we agree that the PE crowd can rot in hell — they're buying properties to standardize, corner the market, and charge extractive artificially-inflated 'market' rents. They won't be idle long, and I don't think squatting is the fix for that.
I'm quite sure that the PE companies are the primary driver here, not small-time fix-and-flip investors. PE firms are taking the houses off the market for good.
The small-time fix-&-flip people take houses off the market for only a short time, and upgrade the property. If they take too long, they WILL lose money, which is also why even if squatters do zero damage (never heard of it happening), the mere delay can cause it to be unprofitable.
Getting PE out of the market WILL reduce the competition and bring down prices. The same is not true for small time fix-&-flip investors.
The small-time fixer-flippers are taking a risk. Their properties may or may not increase in value at all, even with improvements. The goal is to add value greater than the cost of the improvements. From the people I know who have done it, this is mostly accomplished by sweat equity, i.e., they do a lot of the work themselves, hiring trades only where necessary, as if it is all full-price trade work, it will NOT be profitable. If you think that individual enterprising people adding value, including bringing non-viable housing stock back to market viability —AT THEIR OWN RISK— is somehow bad, we should make a regulatory or tax policy against it. Making random people subject to arbitrary effective confiscation at the whims of random squatters is not fair to anyone.
Same for vacation homes. If you think it bad policy that they exist, then enact new tax or regulatory schemes.
Making random people subject to random confiscation and expense will not get the results you want. It will get people even more strongly motivated to be angry at squatters.
Don't misunderstand me, I think squatting is a bad thing.
But its worth understanding why it happens, and a major factor is that home costs, to buy or rent, are out of control, which lowers the perceived ethical barrier to doing so.
There will always be that weird self-interested-self-described-"anarchist" who has convinced themselves that "property is oppression" because they don't want to pay for stuff. I'm not proposing anything to address that guy. I'm saying we should do what we can to prevent people from agreeing with that guy in the first place.
And one of the ways to dissuade people from agreeing with the professional squatter is by discouraging the PE-driven fix-and-flip (which is distinct from the small-time fix-and-flip, but only early in the development of that business. Eventually, you're successful enough that it makes more sense to buy cheap, in cash and without financing, hire others to fix at your leisure, and rent. That's the transition from labor-class to capital-holding class).
The scenario you describe only exists because the number of "investors" buying up properties to flip and turn a profit vastly outnumbers the number people looking to buy their personal residence, and have the skills and disposition to fix it up themselves.
And judging by the build quality of a lot of flipped properties, the investors don't have the skills or disposition either.