I think a lot of this is also landlords make up a smaller percentage of the market as you go up in price and when you get to a 1.8 million dollar home the rent will never justify costs to a landlord. Two facts cause this.
The first is it's always a better deal to live in a property than rent it out.(100% occupancy, no expenses to find tenants, no evictions, etc). Plus there are non-financial reasons people prefer to own. This means all things being equal owner occupiers almost always outbid landlords.
The second is high income individuals are more likely to be able to buy a home than low income individuals.
Basically what happens is in high income neighborhoods, owner occupiers(or developers) bid up the properties until it doesn't make financial sense for landlords to own them anymore. The returns just don't justify it, but the house might still be worth it for owner occupier because they get a better return and want to own a house or lock in neighborhood.
You don’t even have to go that far to make the argument. As a landlord, I would vastly prefer to be renting out 10 homes worth $180k (preferably in different markets) than one worth 10x as much just to diversify a little and avoid capital concentration issues.
Sure, but I’m willing to sacrifice a little return for diversification. Everyone who invests in index funds is, too. As long as the return is still reasonable, 10 units still Beats 1 unit worth 10x as much.
Buying and selling a home has huge transaction fees which destroy this argument. Worse, economy of scale still applies with apartment complexes paying less for the same services than condo owners.
You very much need to find an owner or tenant when you move out. Further, someone needed to pay to find you when you move in. Move every 3-5 years and home ownership is really expensive.
Landlords sell property far less than people move. Remember, you are arguing home ownership as a strictly better deal for everyone “always a better deal” which would include people who move regularly.
> Averaged over all 13 data points in the figure, the average expected length of stay in a single-family home is 11.4 years for first-time buyers, and 14.8 years for buyers who have owned a home before.
I'm not sure how long the average landlord owns a rental property but I would be incredibly surprised if it was longer than this.
The first is it's always a better deal to live in a property than rent it out.(100% occupancy, no expenses to find tenants, no evictions, etc). Plus there are non-financial reasons people prefer to own. This means all things being equal owner occupiers almost always outbid landlords.
The second is high income individuals are more likely to be able to buy a home than low income individuals.
Basically what happens is in high income neighborhoods, owner occupiers(or developers) bid up the properties until it doesn't make financial sense for landlords to own them anymore. The returns just don't justify it, but the house might still be worth it for owner occupier because they get a better return and want to own a house or lock in neighborhood.