Low Price to Rent: Why do people rent?

Question

I'm looking into investing in areas with low price-to-rent ratios, like Metro-Detroit.  I've asked a few PMs this question, but I don't get very good answers:

What is the fundamental reason that price-to-rent is so low?

Some answers I've gotten:

"Section 8 housing inflates rental rates"

"Tenants can't get approved for a mortgage"

"Tenants are uneducated"

Though all true, these reasons seem to only partially answer the question.   Can someone provide some insight?

Alexander Felice · Answer

I think you're going to find it extremely hard and unrewarding to reduce the entire economics of an area into one fundamental principle.

I invest in a low price-to-rent ratio area, and the reasons it's this way are numerous and probably beyond the scope of my actual understanding. for instance:

I think people in this area buy less often than national average

there has been zero inflation in this area, but rents have increased

It's a military base so

the transient nature keeps used home sales high

income isn't that great

the subsidy of living expenses given to military members keeps ALL market rents high

Ryan Detig · Answer

@Daniel Lehrman  In my area I believe it is job related.  I live in Nederland Tx and the majority of well paying jobs are jobs that attract transient workforce.  These jobs are 1-5 year jobs for refineries that pay really well.  This allows the workforce to be able to afford 1000-1400 per month for a house that I might get for 50k - 70k.   The good pay mixed with short term job uncertainty, good schools, and lack of education fosters a rental market of 1.5%-2% rule.  I actually have a property that is a 2.7% rule currently.  Granted that is a triplex.