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Buying a property does take some capital, but large amounts of financing are much more easily available for property than for nearly anything else. There's also lots of tricks like getting a near-zero-down FHA loan, live there for a couple years, then move and turn it into a rental. Anyway, all that is looking at the individual person. If landlords were actually getting outsized returns, you would see outfits with tons of money going into it. There has been some of that, but not a ton, and that has the effect of increasing supply and reducing returns. >>but you are also competing for a rent house from the other 1.2 million Americans that lost there in 2008 You seem to be assuming that those houses they lost were bulldozed or something. The amount of vacant housing increased by the exact same amount. Those houses were available for other people to buy (perhaps instead of renting) or to increase the stock of rental housing. >>one landlord decided to go up in price and the others followed because that person was successful in doing so. If there's sufficient demand for everyone to raise prices, then it was underpriced before, or demand has increased, or supply has decreased. In any case, that's just how markets work - it's not the Evil Cabal of Price Fixing Landlords. >>Most renters will stay where they are even if prices go up because moving has large physical, monetary, and opportunity costs. There's some inertia there, certainly. But it's not at all difficult to shop around and see if your new rent is out of line, so it's hard for landlords to get too far beyond the market. Also, contrary to what tenants seem to think, smart landlords don't casually kick tenants out. Turnovers are expensive (vacancy, repairs, cleaning), time consuming, and risky (the new tenant could be worse than the old one). Tenants that pay on time, don't wreck the house, and don't piss off the neighbors are like gold. Smart landlords only raise rents on good tenants when they're pretty far below market. Of course, bad tenants are a whole different story. |