Rent Increases Depends on the Tenant
So, who exactly makes up the consumer base in the market?
Two percent of people hold 80% of total savings, while the other 98% hold just 20%. Who ends up renting older, run-down apartments in prime locations? The people who can afford to rent but can't afford to buy. And what determines whether rent prices can rise? It all comes down to one thing: whether you're bullish on the future income growth of that 98%.
Rich people aren't mass-buying numerous run-down apartments, which signals that they don't believe the 98%'s income growth will outpace their own.
Analyzing an industry is like analyzing a game. In this game, there are only so many players, each with their own motives and future resources to consider. Different niche markets (users), different supply and demand dynamics, and different conclusions.
