One question I had was - Regardless of location, what happens if the market goes south due to political / cat event / bubble activity… and house valuation decreases.

Even if property values decline from a market downturn, that doesn't necessarily mean that your rents will decrease.

Bottom line is I think we are just going to get used to higher rates of inflation permanently. housing is 12% to 14% of GDP. federal funds rate has very little to no influence on home mortgage rates. it will influence business loans, credit cards, car loans, other business and consumer loans. mortgage interest rates are influenced by the 10 year treasury yield. the Fed will be engaging in Quantitative Tightening with instead of allowing treasuries to mature and roll off the Fed will sell off treasuries prior to maturity to increase supply, decrease price, increase yield to cause mortgage interest rates to increase to cause buyer demand to slow to cause home price inflation to slow to cause a drag on GDP to slow overall inflation. in anticipation of the Fed's QT the mortgage market and 10 year treasury yields are already reacting.

This should cause home prices to flatten or likely decrease to some degree in the future. 

The five county region saw a 1% decrease in new listings compared to March of the preceding year and an 68% increase from the preceding month.

@Will CruzReplying back to the title of your post.I think we are in for a decrease in the rapid pace of home price increases, multiple no contingency offers and overall hype around the country with the 30 year average primary mortgage climbing over 5 and a quarter.Nevertheless, Tampa is landlocked on 3 sides and we don’t foresee inbound net migration slowing anytime soon.

And even if that were to happen, they would be the first ones to get cold feet and NOT buy an investment property. was not only the lux market in CA.. anyway the point is there are regional situations where values do decrease but then they spring back over time..  

Am I decreasing the value off the kitchen by doing so?

Unlike other investments that may actually decrease in value during recessions, home values remain steady followed by a rapid increase after recessionary periods. 2) Mortgage rates typically go down during recessions.

If you could achieve that then you would 1) decrease your monthly housing cost, 2) be building equity as your tenant in the main house is helping pay down your principal 3) you would be able to access the long-term appreciation of the property and 4) you would reap the tax advantages of owning real estate (i.e depreciation, etc).