I like that way of thinking about it, however it doesn’t explain the way that people make money on rental properties. Typically in any market there are a number of properties that are not owner occupied and the owner generates an income off of these rental rates. It is understood that for a primary residence there is a premium to pay, however, if these prices stay too high, will the rental market be choked off becuase nobody see it plausable to purchase a rental property? What could be other outcomes of this gigantic delta of rental payments versus ownership on both primary and investment property. I refuse to believe that there is no way to make money on rentals in San Diego. Maybe it will just take more time for the market to get back to equilibrium.
Another thought I guess is that the premium of ownership is the money that must be put down to reduce the mortgage and in turn make in profitable to rent a property out. That would be a typical mortgage loan historically to put down 20-30% and pay on the remaining 70%. Maybe when you factor that out of the costs it could make you money.
