“I guess the amount of money lost to renting could be looked at as…”

You never lose money to renting unless you’re paying above-market rent! Do you “lose” money when you buy groceries? Of course not, you get valuable food in exchange for your dough. Same with rent: you get a roof over your head, which is valuable. At the same time, you reap the benefit of being able to move more easily in case a better job shows up (should you desire to do so). Rent also protects your family’s net worth by keeping you from buying a depreciating asset.

As to the original question, how low can they go? Figure out how much that house would rent for today, then multiply the monthly rent by 100. That is how low I think a house can possibly go, in the sense of being a floor. That doesn’t mean I believe houses will necessarily get that cheap. What I mean is that a 100x multiplier of monthly rent constitutes a “floor” from which the price will likely not drop further (at least not a lot further).

The reason is that at 100x monthly rent, investors will buy the house to rent it out at a profit.

I hope this helps, and I apologize for the rant at the beginning. It’s amazing how much we have been brainwashed to think that paying rent is “throwing money down the drain”. If anything, everyday we see examples of FBs who’ve been throwing down the drain in mortgage payments in exchange for the privilege of “owning” (ha!) a depreciating asset that has decimated their family’s net worth.