[closeparen]

I don't think the rental and ownership markets are that segregated. If buying a house costs less than the expected value of renting it out for a while, a smart investor would buy that house and make it a rental.

There's a huge amount of demand to live here. The price level has to rise until only the number of people who can fit in the housing stock are coming in. We could have no inward migration, but I don't think we could have a large number of people without money moving in - how would we decide who gets a home and who doesn't, if not by raising prices?

[seanmcdirmid]

To become a landlord, you have to have either the capital or credit. Playing landlord even in the Bay area is risky.

Vancouver, even though rents are crunched also, is not so affected much by internal movements. The distortions are much more at the sales level and then, speculators leaving bought property empty because they intend to flip sooner rather than later, or just don't want to rent it out for money that isn't very comparable to the purchase price.

Vancouver is basically the mainland Chinese real estate market: very expensive to buy a house, but still cheap (relatively) to rent. The Bay Area is not.