While not contending directly for the same stock, homeowners are very interested in matters that influence rental prices, albeit in less direct way, as you say. Try proposing to build affordable housing in a neighborhood and you’ll find yourself drowning in homeowners coming out of the woodwork complaining that “we want more affordable housing, but this project just isn’t right for our neighborhood.”

I think we’re on the same page. As I wrote in my comment, rents and home prices cannot diverge >for long<, and you write that they can diverge >to some extent<. I think we are saying the same thing, just emphasizing different aspects of the same statement.

> Contrary to your assertion, landlords are not primarily focused on the appreciation of the market value of their assets exceeding inflation but instead on achieving a reliable income stream from rents. This cash flow can be sustainably profitable under stable rents, so the structural conundrum you propose doesn’t exist in the real world.

Rare is the landlord who continually settles for a stable rent when increasing it is feasible.

As home prices rise, would-be buyers are forced out of the market and have to contend with existing renters, increasing demand for rental housing, which in turn causes rents to increase. Taxes on rental properties increase, also serving to increase rent.