All else being equal, lower mortgage rates reduce the cost of ownership and, thereby, allow more people to afford to buy.

Then the prices lower towards the date and you end up booking at a low price or worse just being vacant.I think manually pricing your STR'S is a much better approach.So many people are looking for the next cool software app to buy a subscription to.

Additionally, timing the sale in a lower-income year or exploring potential deductions could further reduce your tax liability.

What if one party is doing more leg work? 

This was my first deal, and house hacking made the most sense because it lowered the threshold for risk in my mind.

Shortly after the crash my tenants learned that condo developers were renting out luxury apartments in the area for around the same rents I was charging so I was forced to lower rents. 1200/apt 2 1050/apt3. 

Rentals are extremely difficult to make pencil right now but would only personally consider higher end projects because the costs are far easier to absorb than trying to build in lower value neighborhoods.

They get a higher return since they are covering housing cost, have the $250k per spouse primary residence deduction in gains, is a savings account, higher leverage position, lower interest rate possible, will pay more premium for location, etc.House might be overpriced for REITs but not for home owners.  

Would the IRS allow them to benefit from a 1031 Exchange if they would be "swapping" a million-dollar rental for one that is much lower in price?

These markets are attractive because of their diverse, resilient economies, lower priced homes, and stable home price appreciation.