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How does the rental market affect the real estate resale market?

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A few laws you must understand for the real estate market to remain healthy. 

1. When rental prices go up more homes tend to get built

When rents increase, the public generally starts to question whether they should put their money to a mortgage. Home builders see these trends and increase home starts to fill the demand

2. When mortgages and pricing rise, the rental market improves

When consumers can no longer afford the downpayment required by the current housing prices, they migrate back to rental options which complete the circle of dependancy.
So since pricing is going up why are people not moving towards rentals. 
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2 reasons:

1. There is no inventory on both the sales and rental sectors of the market. 


2. Most consumers are worried that equity and inflation are rising so fast that if they don't act now they will be priced out of the market. 

Here is what will or could drive change:

  • Some significant level of a market crash
  • A war
  • Government Policy
  • Significant jump in mortgage rates

Here is what will not drive change:

  • Consumer fatigue
  • Overall pricing gains

Remember in 2008? The market didn't crash due to consumer fatigue or price increases. It crashed due to bad policy couple with an economy pent up with mortgage backed securities. 

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