> If the marginal return to capital of providing rental housing goes up relative to other investments, then more capital will be invested in providing rental ho

> If the marginal return to capital of providing rental housing goes up relative to other investments, then more capital will be invested in providing rental house, until equilibrium. More capital may be invested, but not necessarily in "providing" rental housing. Housing, being dependent on location/land, is not a commodity. In fact, you'll often see the opposite: Home owners (investors in their own right) and even developers trying to inflate housing prices by restricting supply by exploiting zoning laws: it pays to be a home owner in a neighborhood where the minimum lot size is 1 acre (Atherton), or, say, a developer interested in building only luxury apartments in desirable areas (Solana Beach, which is a city in California with 0 low-income housing, or really anywhere along a CA Coast). The funny thing is, as home prices in major US cities become out of reach to the average American (as evidenced by the fact that many cities have higher renter rates than owner rates), a drop in property values could be a GOOD thing -- in that it could allow tenants to potentially own the dwelling they already live in which is currently out of reach.