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When someone decides to sell a good because market conditions have changed, the price of the good goes down.
Rental prices are proportional to overall housing prices. In general, more homeowners is correlated with lower rents. Renters are also removed from the market.
Yes i agree with that part
That is correlation without causation. When there isn't enough housing, rent and property prices will both be high. However, if properties get taken off the rental market and are put up for sale instead, with no changes to population or overall housing supply, that is going to drive up rental prices. There will be fewer people renting, by necessity, but the people who want or need to rent will not change by as much, creating an imbalance between supply and demand that will drive up rental prices.
Not to mention another thing we haven't touched on which is why landlords are leaving in the first place. Those who remain in the now-less-profitable environment may try to raise rent to compensate.
Why would demand not change by as much as supply, if both a buyer and a seller have been removed from the rental market? It's like landlords being forced to sell to tenants at a reduced price.
Because having your rental unit taken away from you does not remove you from the rental market. You might consider leaving the rental market and buying property if housing prices collapse, but outside of that most people are going to have to look around for a new rental unit in a now tighter market.
It does remove another renter, though. The market would only be tighter if they reduced supply by more than demand.
How does being evicted remove a renter from the rental market?
The new homeowner is the renter removed from the market, not the previous renter.
That's a big assumption that the new homeowner was a previous renter and not just someone cohabiting or buying an additional home.
Not when we're looking at large groups of people - there's no reason to think the average number of occupants per home would change.
I didnt mention anything about the average number of occupants per home. What i did say was that, if 100 homes go from being rented to being sold, not all 100 homes will go to previous renters, for the reasons I mentioned above. Doesn't that make sense?
If the average number of occupants isn't changing, then cohabitation and second houses are irrelevant to this discussion.
To whom is the apartment being sold?
Perhaps you can find some statistics to back up your general point? If you're right, then we should see the opposite correlation - higher homeownership with higher rents.
The average number of occupants doesn't change because everyone will still be living somewhere (excluding homelessness but we can ignore that). However, that does not mean cohabitation and second houses are irrelevant.
Both of these scenarios are excluded from your example above. As a consequence of them, some renters will have to start cohabiting (or become homeless). The fact that there are more people who want to rent their (own) place then there are rental units will drive up rental prices.
https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.20181289
Here you go.
That's an interesting comparison, thanks! I'll think about this.
Cheers