One argument I hear repeatedly regarding housing is that rents will increase as people foreclose and seek shelter as non owners. The problem with that argument is that they’re leaving houses behind. Houses that will eventually rent out or be purchased. That will either increase the supply of rentals or reduce the pool of renters if it’s purchased.

Another point. First time buyers who enter foreclosure and are forced to rent again are probably going to have ruined credit and a load of debt which means they’re likely to rent a less expensive place after their foray into the housing debacle.

We also had a residential construction boom. If you look at downtown San Diego you’ll see dozens of new condo towers. I saw an ad on Craigslist the other day. You could rent the place for $1800 a month or buy it for $470,000 plus HOA dues. A large number of those new condos are now rentals.

When you build vastly more places to live than population growth would dictate it’s hard to imagine rents doing anything but falling.

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