Let’s play out the long term implications of REITs…

[David S.]

I'm really surprised there isn't more talk about the long term ramifications of the REIT industry. I'm investing in KC and have watched this industry cause a run on lower end housing that's gotten quite hot all of a sudden. Rents have ballooned significantly at the same time. But they would; as Wall Street demand grows, prices rise, first time homebuyers are left chasing homes that get more and more expensive, with any deals selling on cash terms and no inspections. This causes a greater demand for rentals as many get priced out or give up altogether. They're effectively creating their own rental market, and they know it well.
I, for one, can’t say I find this to be a healthy dynamic. It legitimately makes the American dream harder to attain for many. But what I really want to hear is what people feel the long game looks like here? If I recall correctly, demographics favor the housing market for another 10-12 years, but after that we’re likely to see a shift to a gradual glut of housing (correct me if I’m wrong there). REITs will only buy homes if the returns and demographics support it; they have an investor base to cater to. I get the impression this could become the next real housing bubble where companies holding hundreds of thousands of houses all want to exit simultaneously. Effectively a long term pump and dump scenario. 
This trajectory can’t go on forever, so what does the industry look like in 10-20 years and could it be creating serious risks for us mom and pop investors? I think personally think so…