If rents continue to rise home prices won’t fall substantially.
Urban offices aren't filling up and essential workers have less money than ever.
Interest rates have gone from 2.75 to 5.4%, meaning monthly payments on purchases have gone up almost 40%. Not all that will transfer to the rental market, but I be surprised if rents don’t continue to go up; barring a general collapse in house prices.
If a significant fraction of landlords have financing costs that greatly exceed rental income, that is their problem. They can't just pass that cost on to renters because they feel like it.
Purely anecdotally, a large proportion of the housing available for sale in Plymouth (UK) seems to be rental property. Tenants are being thrown out while landlords sell up.
I have been wondering if the drive to cash out at a time when holding cash isn't necessarily such a great idea is exactly what you suggest - that those with buy-to-let mortgages are looking at the potential of interest rates rising faster than rents.
Yes, they aren't 100% interchangeable (down payment requirements and transaction costs can change the equation renting all things being equal ) and some markets (the bay area in particular) seem to have a bizarre separation in the cost of renting versus buying, but in general this holds true.
This has been attributed to the high cost of housing. [1]
The secretary of HUD was here a month ago taking a tour, talking about affordable housing.
We started a family last year and despite needing to move out of a duplex, we would not seriously consider a purchase.
Prices and terms of sale have been outrageous.
Deciding our best bet was to rent, we found the rental market for single family homes a disaster.
The only way we found something was because we know a postal worker who saw a for rent sign while walking their route.
The place never hit the internet.
The house needs a ton of work and the only way it can be priced the way it is is because the market is so totally busted.
My wife tracked pricing and made a spreadsheet of comparable rentals when we signed the lease. I’d guess our rent was at least $400 under market.
I grew up in Portland. I went to a portland public school and college in Oregon. I had wanted to live here.
However, we need housing to show clear indications it will turn, an unexpected windfall, or we will move away from family here and toward other family in the mid-west.
Regular people are desperate here, valley folks are coming in doing the same thing we would do to wherever we could land in the Midwest.
Housing is broken.
[1] https://www.wweek.com/news/city/2022/05/27/new-census-number...
We need to get a federal level right to build housing on your land. We also need to overturn Euclid v Ambler.
I have also known quite a few people have recently left California. And not a single one of them left a vacant house behind.
Now that real incomes have been falling rapidly for months, we can expect household contraction and rent stagnation or decline.