Is there an impending rental price bubble?

[Jonathan G.]

So I have been thinking recently about the market recovery we have been seeing over the last few years. It seems like last year and this year the pre bubble 600-900K + market is recovering and the pre bubble 200-300 market has been steadily increasing / recovering for even longer (the last 3-4 years) . This leaves one market that has not yet recovered, the 100-150 "starter home" market. These homes seem to be owned by 3 types of individuals. 1) The first is myself with one of our 5 properties. Bought at or near peak for my personal home and owe too much to sell so I have rented it for the last 7 years optimistic the market will recover. 2) Investors. The savvy type. Many of them are reading this. They are the ones who snatched up all the foreclosures when folks stopped paying their mortgages. They don't want to sell their little golden geese. 3) Home owners who bought these homes and partially weathered the storm and stayed put in the home as a primary residence . Essentially, they are stuck / trapped as they cannot afford or do not want to sell and have honored their promise to pay or are just simply happy where they are at Because starter homes are not moving/ selling, people in that part of their lives/careers are forced to rent rather than pay Now, here's the bubble hypothesis. What if the current 100-150 "market" chugs on up to the 150-200 point? Then these 3 groups are again willing to sell. The supply vs demand ratio starts to favor supply . This allows renters to now have access to these homes with appraisals that would support the higher value and loans would start to flow. We as an investment group already know that it's cheaper to buy than rent. Renters will realize this as well. Once this happens, could the recent years surge in rent prices in this group still be supported? If not, then rent prices in the more expensive homes will adjust downward as well in order to maintain a smooth continuum in rental prices as the size/quality of the rental homes increases. That's why I am thinking the value on my three 250-300k is a bit frothy but I'm keeping it since my plan for those properties has always been long term.