I appreciate you taking the time to respond. To directly address some of your points, even if 10% of the population could afford to become landlords with 4 doors, the vast majority of them wouldn’t. The market will also not allow this for reasons I’ll go into below.

As for determining when there’s enough housing supply, there’s a lot of metrics you could go by. For example, average home sale price relative to median household income for the local area. Public polling to determine the number of people who are looking to buy or rent but are having issues doing so, etc. It’s not a simple problem but there are assuredly some acceptable solutions.

Vacancy rates can also be misleading, especially compared to the number of homeless people. The overwhelming majority of people in the USA are not homeless. I don’t remember the exact number, but the total homeless population is something like a fraction of a percent. Just normal housing vacancy due to turnover is a few percent of housing stock which on its own accounts for almost all of the those vacancies. It is extremely rare that residential property sits vacant for extended periods of time unless there are severe issues with it.

As for profiting off rent, until land value tax exists, I agree, renting property out exhibits of a level of rent seeking in the academic sense of the word. There is still an inherent service provided in that the landlord assumes the risk of property ownership though, but yes, I agree that in a lot of cases, the value extracted simply from being the owner of the property is excessive. I’ll get into this more below as well.

I think a major point of disagreement is that I believe that if we increase the supply, market forces can naturally balance for the demand of both renters and and owners. Assume you’re looking at an area where supply and demand are well balanced and proper measures against anti-competitive practices are in place (and also no stupid taxation schemes that make it beneficial to have vacancies, looking at you NYC). First, you have the actual ownership market. All purchasers are competing against each other to purchase property at the lowest price possible. No rational actor is going to make offers far above the actual worth of the property given that supply is saturated. That includes both owner-occupants and landlords. For landlords, there are two main considerations for value, both cashflow and gains on the value of the property. In a balanced market, the average value of a home is absolutely not going to beat something like the stock market, so as an investment, it’s not a great move beyond adding some portfolio diversification. Landlords also have to compete for the pool of potential tenants in a balanced market. If there is an oversupply of rentals, and an undersupply of tenants, home prices will go up since supply for buyers is not being met due to being carved out by LLs, and rent cashflow goes down due to tenant shortage. When this begins happening, it becomes very advantageous for LLs to sell as the prices have gone up and the rents have gone down. In theory, this mechanism should prevent things from getting out of hand to begin with. Where you see big issues is in markets where demand outstrips supply. LLs can buy out the supply from owner occupants, but instead of cratering rent, the undersupply allows them to turn around and charge obscene rates to the top percent who can afford them.