> It does not affect marginal decisions (buy vs. keep; rent vs. owner-occupy). Hmm, I don't see how increasing the price of an input fails to increase its pric

> It does not affect marginal decisions (buy vs. keep; rent vs. owner-occupy). Hmm, I don't see how increasing the price of an input fails to increase its price. The "somebody's gotta own it" argument isn't convincing. Not that confident in this, but here's my take: it does affect keep vs sell: if you can't afford to to keep it (because your rent income no longer justifies your costs) then you have to sell it. To whom do you sell it? Not other people who wish to be landlords, presumably, because they'd in the same bind as you. But the housing price sinks until someone buys it to live in (their property taxes sink too!). Perhaps you even sell to yourself by refinancing and then move in.