My two cents - as some posts have pointed out, to say that rents are 'collapsing' is a bit of a stretch, but we need to keep in mind that in the age of peak attention, a headline like that yields a lot more clicks than 'Rent growth may be slowing down/softening'.
But not only that, the slowdown in rent prices becomes a story due to the perceived asymmetry in the nature of rent prices: not only landlords and investors, but tenants also tend to assume that rent will always go up. To illustrate - I live in a large apartment building in NYC, where the high-end and luxury sectors are massively overbuilt. A brand new building with 70,000 sqft in amenities just went up in front of mine. And yet, my building tried to raise my rent by ~10% this year! In a falling market! Why? Because, if for nothing else, the average renter is not carefully watching the macro trends in housing and the real estate market. If 25% of the tenants sign on the dotted line because they complacently assume/accept that rents tend to go higher, that's huge for the building's bottom line. Why wouldn't the leasing company try it? It's a free option for them.
In much the same way, a car owner doesn't show up at the gas station waving a chart of crude oil and yelling 'gas should be cheaper!!!'. The gas station owner only lowers his prices when his competitor across the street capitulates and lowers his first - the downward movement in prices is driven by the supply side, not by the demand side, and therefore the nature of these prices will tend to be 'stickier' and less noticeable during a downturn, although like some have pointed out above, it's certainly not immune to the basic laws of supply and demand. The impression that rents don't move lower is owed much more to the incentive that landlords and owners, as a class, have to loosely act in cartel-like fashion and 'squeeze' the renter even if the market is moving a little bit against them, than anything else.
Interested to hear you guys' thoughts.
