There's a massive surplus in the Boston/Cambridge/Arlington market right now, thanks to cheap money (low interest rates on mortgages).
That's before considering the optional upgrades that people tend to do to owned houses that they don't do when they are renting. (A functional kitchen with white appliances and laminate counters in a rental is a functional kitchen. Same kitchen in a house is a drive to install granite countertops, subway tile, pendant lights, and stainless steel appliances. Scratched wood floors and 5-year old beige paint are fine in a rental, etc.)
> There's a massive surplus in the Boston/Cambridge/Arlington market right now, thanks to cheap money (low interest rates on mortgages).
If that is the case, landlords are leaving money on the table.
> That's before considering the optional upgrades that people tend to do to owned houses that they don't do to rentals. (A functional kitchen in a rental is a functional kitchen. A functional kitchen in a house is a drive to install granite countertops, subway tile, and stainless steel appliances. Scratched wood floors and 5-year old beige paint are fine in a rental, etc.)
That is a separate issue, though I think someone who is not disciplined enough to avoid vanity upgrades to their property is probably not disciplined enough to maintain a significant investment balance either.
Edit:
Just took a quick look at Cambridge on realtor.com, and I would classify that as a textbook out-of-whack market. The rents are stupid low compared to the sale listing prices. In contrast, rents in my part of northern New Jersey are roughly the same, but sale prices are less than half. Hell, even Manhattan isn't that out-of-whack. I don't think you should be taking that as typical.
Maybe they are, but I doubt as a large class they're all similarly stupid. I think it's because their available rent is capped by desirable tenants buying property because of low interest rates. "Desirable" in this case meaning those who consistently pay rent on time and therefore likely have credit scores of 750 or better so can readily get a 4% or lower mortgage, which drives bidding wars for properties, which increases purchase/listing prices, which increases the surplus for just renting.
I agree with your edit that our local market is out of whack. It's what's kept me from buying investment property at all.
RE is location based. I live in one of the top places to move to in the US, and bought a house in 2011. I would have a hard time finding an equivalent place to rent for my mortgage cost right now, and would have a hard time affording my same house if buying it today. Of course, I had to do some maintenance and there is friction if I want to move, but even then rent would be more expensive in monetary and personal terms (can't do what I want with my space).
I'm renting in East Boston right now and my parents are getting the idea in their heads to try and snatch up property in the area before it really starts to take off (read: gentrify). On the one hand, I kinda get what they're trying to do, but on the other, what you mentioned here and in the parent comment makes me a little hesitant to agree with them.
That's before considering the optional upgrades that people tend to do to owned houses that they don't do when they are renting. (A functional kitchen with white appliances and laminate counters in a rental is a functional kitchen. Same kitchen in a house is a drive to install granite countertops, subway tile, pendant lights, and stainless steel appliances. Scratched wood floors and 5-year old beige paint are fine in a rental, etc.)