I think the point is that properties on market are, as a rule, not very recently purchased with a 30-year mortgage. So the monthly cost now required to cover the owners costs may be based on financial conditions from 6 years ago. If the rental market has a lot of properties that have been held a while but house values have rocketed, then you have a critical mass of owners willing and ready to out-compete brand new mortgage rates even if they ignore their equity advantage.
In my area, that’s what we see, real estate prices are dramatically up as are interest rates, so mortgage cost to acquire is a fair amount above the going rate to rent comparable properties. Someone getting a 30 year mortgage to rent out a property would be underwater for very many years in the current market conditions around my area, as they have to compete with more aggressive owners that have had their properties for many years.
Ah yes, I could see that situation arising, although frankly I’m as surprised to hear of landlords competing for tenants as I would be to hear of them selling their properties for under market value. Not that I’m doubting your honesty–it’s just not been my personal experience.
I’ve heard too many personal anecdotes of landlords trying to hike up rates by seeking spurious evictions, or refusing to install climate control, for tenants who are getting a “good deal” at lower rates. Maybe there are rational markets out there, but I don’t personally hold out much hope for landlords to be reasonable in the face of the dual pressures of fear and greed.
I think the point is that properties on market are, as a rule, not very recently purchased with a 30-year mortgage. So the monthly cost now required to cover the owners costs may be based on financial conditions from 6 years ago. If the rental market has a lot of properties that have been held a while but house values have rocketed, then you have a critical mass of owners willing and ready to out-compete brand new mortgage rates even if they ignore their equity advantage.
In my area, that’s what we see, real estate prices are dramatically up as are interest rates, so mortgage cost to acquire is a fair amount above the going rate to rent comparable properties. Someone getting a 30 year mortgage to rent out a property would be underwater for very many years in the current market conditions around my area, as they have to compete with more aggressive owners that have had their properties for many years.
Ah yes, I could see that situation arising, although frankly I’m as surprised to hear of landlords competing for tenants as I would be to hear of them selling their properties for under market value. Not that I’m doubting your honesty–it’s just not been my personal experience.
I’ve heard too many personal anecdotes of landlords trying to hike up rates by seeking spurious evictions, or refusing to install climate control, for tenants who are getting a “good deal” at lower rates. Maybe there are rational markets out there, but I don’t personally hold out much hope for landlords to be reasonable in the face of the dual pressures of fear and greed.