[bryondowd]

Don't most investment homes rely on tenants to offset the maintenance and tax costs of owning the home? Construct enough to meet demand for places to live and the rental market should drop, which would hurt the home-as-investment model, which in turn should bring down home prices, right?

[sandworm101]

Not these days. In hot markets (Vancouver, SF etc) real estate tends to appreciate faster than rent. Having a tenant in a property, along with all the associated rights and obligations, makes a property more difficult to develop or sell. Once upon a time a rental unit with a good tenant was worth more than one without. These days you need to get the tenant out in order to refit and show the property to prospective buyers. Unless an owner plans to keep the property unimproved for many years, having a long-term tenant is just an inconvenience.

Yearly rent is generally going to be about 1/20th the total value of the property. So if the owner plans on doing anything to improve the value of the property by more than 5% in a given year, that improvement process is worth more than having a tenant. In a market like Vancouver, where rent-to-cost ratios are even lower, a tenant paying rent is almost irrelevant in the equation.

[WalterBright]

> along with all the associated rights and obligations

Government regulation (again) exacerbates this problem. In Seattle, landlords have to give 6 months notice for rent increases. They also are obliged to pay the tenant's relocation costs when the tenant leaves. They can't evict tenants who don't pay rent. Seattle will provide free lawyers to tenants who want to sue their landlords.

So, yeah, if the real estate market is rising fast enough, it's best to not rent it.

[adgjlsfhk1]

Right because in a "free market" tenants have no rights. Moving costs a minimum of 1 day of work, which is not available to many working people. As such, without laws to prevent it, landlords could arbitrarily raise rents whenever they felt like it.

[WalterBright]

> in a "free market" tenants have no rights.

Their rights are what is mutually agreed upon in the rental agreement.

> without laws to prevent it, landlords could arbitrarily raise rents whenever they felt like it.

Many rental contracts have clauses specifying when and how much the rent can change.

Landlords can demand whatever they want, but a tenant would have to agree to it. Tenants can also demand whatever they want, but the landlord would have to agree. That's supply & demand at work.

[adgjlsfhk1]

contacts only work because we don't live in a few market. without regulation, a contract is just a piece of paper

[WalterBright]

Contracts are not regulations. But the government provides contract enforcement, which is an essential part of a free market.