I believe the original post was wondering how come rental prices were so high in desirable areas. Perhaps there is a rental bubble? Or maybe it’s simply supply and demand with a lot of demand coming from renters who have left the buying pool for now (either recently sold or just moved here and putting off their purchase until prices stabilize). That’s my guess because I too see single family rentals rising like crazy in the desirable areas. I’ve seen sellers take their homes off the market and rent them for positive cash flow if they bought in 2003 or in some cases 2004. It makes sense if you’re not desperate to get your equity out right away. Why compete with a desperate seller in a buyer’s market? I’ve seen an investor in South Carlsbad raise his rental rate 50% from where it was in 2003 in what is not a great location IMO. It’s all about supply and demand and in this case the demand is not being driven by speculation or easy money so it seems more sustainable to me.
