Coming "Housing Affordability Crisis"- effect on landlords?

Question

Hi everyone,With the U.S. in obvious housing shortage for the next decade at least, the narrative seems to be that this would be positive for real estate investors. Every podcast episode is talking about how the government would fix this in a way that puts more money into landlord pockets - rent subsidies, directly paying landlords for housing, etc. While hopefully this will happen, I'm wondering how we seem so confident that things would go in this direction instead of the opposite. Isn't there just as much chance that the policy-level fix for this might lead to rent control, rent ceilings, or other possibilities that might hurt private landlords and take away the free market forces? Would love your opinion! Thanks

John Underwood · Answer

I can see blue states like CA leaning toward rent control and the like.

Red states should be fine and I am currently getting crazy market rental rates. Supply and demand is driving this and not inflation.

Derek Levine · Answer

I want to add this thought I've had (and I agree that we don't know which way the gov't will go and who will be most favored)...

When the Fed raises interest rates up to where they "should" be, the traditional idea is that this lowers the cost of real estate because the higher rates cause mortgage payments to go up, and since people can only afford so much in monthly payments, sellers "have" to ask/expect lower pricing for their RE. Maybe rates will remain artificially low, but they can only move in one direction if and when they do move.

But, we are truly experiencing a housing shortage in many areas, and building costs have raised substantially, so high-demand "should" continue to result in higher-prices for RE. These two scenarios are in conflict with each other, but both are realistic.

All I'm saying is that I'm feeling very skeptical towards anyone who claims to know what is coming in regards to sale prices. Add my points to your points, and we are truly in murky waters. With that said, I'm trying to buy up what I can right now because I am leaning toward there being increasing shortages of supply, and I could imagine the Gov't simply sending out vouchers to lots of people to help them pay for rent. The gov't may increasingly subsidize landlords in this way.