Maybe cheap money has caused increased wealth to those closer to the 'watering hole' ( capital flows ), thereby inflating rents in metropolitan areas close to said 'watering holes'. If you're 'in' you can afford it.

There are of course other major, possibly greater, factors like, NIMBY housing policies ( incl. rent-seeking boomers ).

In my experience, you have more people renting homes that are 100% leveraged, so your paying their crappy mortgage, with some "upkeep" costs on top. If interest is higher, more people are renting houses with more equity tied up in the house, so their costs are lower and they rent cheaper.

Here is a good article on the subject :

https://www.investopedia.com/articles/mortgages-real-estate/...

Would imagine low interest rates increase housing prices as more people can afford a mortgage, higher housing prices increases rents

The more people who can afford a mortgage, the fewer people that need to rent in a given market.

It seems obvious that low interest rates would drive up property prices. It's less clear whether that would drive up or down rents.

It would tend to drive up rents by: requiring landlords to tie up more capital in new purchases of buildings (decreasing their marginal propensity/ability to put new buildings online for tenants), decreasing the number of people buying [increasing the number renting] due to fear of bubbly real estate market or inability to save down payment.

It would tend to drive down rents by: lower returns in other passive investments might drive investment towards rental real estate chasing income (increasing supply), steadily increasing property values might encourage marginal buyers to buy, reducing demand on rental units in an area, foreign buyers might be more inclined to "park money" in USD real estate, some of which could be rented to offset the cash flow.

> It's less clear whether that would drive up or down rents.

Rental properties are convertible to condos. If you make money available to buy property then exactly that happens, which reduces the supply of rental properties available to the people who can't afford to buy even with the mortgage subsidies, thereby increasing rents.

> It would tend to drive down rents by: lower returns in other passive investments might drive investment towards rental real estate chasing income (increasing supply), steadily increasing property values might encourage marginal buyers to buy, reducing demand on rental units in an area, foreign buyers might be more inclined to "park money" in USD real estate, some of which could be rented to offset the cash flow.

Rents are directly related to property values. If property values are higher it takes more capital to purchase a property in order to rent it out, which requires higher rents to justify someone doing that instead of allowing the property to be sold to a resident.

In theory mortgage interest subsidies might not increase property values if the market responded to the demand by increasing the housing supply. But then zoning laws prevent that from happening, so they do.

And there is no reason for someone who buys housing for speculation to rent it out at below market rates. Moreover, it has been a major problem that many of those people don't rent it out at all because at scale not renting it increases housing prices (which is what they want as speculators), leading to a large amount of unoccupied housing in the midst of a supply shortage.

I agree with much of what you posted, but there is a lot of individual incentive to “defect” and rent your speculative/parked real estate. There is no need to rent “below market” for such supply to move the market clearing rent. Merely bringing more supply online tends to change the clearing price.

>but there is a lot of individual incentive to “defect” and rent your speculative/parked real estate.

Ah, look it's someone that has never rented property before.

a) You rent your house in a city in California. You figure out your renter is trash, and is trashing your house. You can't move them out for months and they do tens of thousands of property damage in the meantime.

b) You live in a city with rent price fixing.

c) You don't have time to manage the property, but have been burned by poor rental management companies.

Your background investigation on me is flawed. I have rental property experience, mostly good but some including trashed by scum of the earth tenants.

> I agree with much of what you posted, but there is a lot of individual incentive to “defect” and rent your speculative/parked real estate.

Yeah, I don't really understand their justification either. But they are actually doing it for some reason.