[JumpCrisscross]

> There is no situation in which adding foreign money results in more houses for locals

Assuming fixed supply, yes, it's (probably) a zero-sum game.

> eliminating the ability for foreigners to buy materials for renovations will move the curve intersection down to a lower price and volume

Assuming a frictionless market and no economies of scale, yes. In reality, you'll have a smaller set of options for locals at a slightly (but not dramatically) lower price. (Again, for an example look at all the markets foreign investors shun.)

> will be fewer renovation crews, because some crew will not be profitable at the lower rate, but more crews working to renovate houses for Spaniards

You absolutely cannot conclude this from first principles.

You make valid points. They just need to be followed up with data. The systems you're talking about are too sensitive to generalise like this.