Not enough rental properties means developers will start building more rental properties, which means they will ignore regular for sale housing, which means prices in the for sale market will go up, which means developers will build more units to sell, which will cause a lack of units in the rental market, ad infinitum.
Exceptions for markets with government controls. :)
(One thing I like about the Pacific Northwest, our government controls are minimal, and have loosened up in many places recently, with less height restrictions allowing for higher density housing!)
Not just subsidized mortgages. Also tax and other incentives, zoning laws that make it more difficult to build rental properties, and infrastructure that can't support (or is specifically designed to prevent) the kind of population density it takes for building rental properties make financial sense for developers in many areas.
Combined with a lot of political tailwind behind these kinds of broad-spectrum public subsidies of landowners, because in the USA it's common for working class folks to think of themselves as really just being rich people who happen to not have a whole lot of money.
I like the quote, "Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires." often attributed to Steinbeck.
Exactly. This is most certainly not cyclic because legislation and incentives are not cyclic in nature. If laws, regulations, contracts, policies, etc. don't change, then this is likely to get worse before it gets better.
More than that, the US mortgage market has essentially been nationalized: Over 95% of mortgages are backed by Fannie Mae and Freddie Mac (which in turn are backed by the federal gov). Nowhere else in the world can homebuyers get a fixed 30 year mortgage at 4.17% (http://www.freddiemac.com/).
Not enough rental properties means developers will start building more rental properties, which means they will ignore regular for sale housing, which means prices in the for sale market will go up, which means developers will build more units to sell, which will cause a lack of units in the rental market, ad infinitum.
Exceptions for markets with government controls. :)
(One thing I like about the Pacific Northwest, our government controls are minimal, and have loosened up in many places recently, with less height restrictions allowing for higher density housing!)