I read an interesting comment thread on a Seattle-oriented forum the other day: It was a thread about some landlord something or other--the topic isn't all that important, just that it brought up the classic landlord-versus-tenant debate--and someone made the comment that a sizable contingent of landlords in Seattle are one- or two-unit (usually standalone house or townhouse, but sometimes condominium or duplex) owners renting out places where the landlord previously lived. The point was that tenants should be more predisposed to give "landlords" as a group a break because many landlords aren't corporate real estate trusts.

A person replied to take issue with that statement and made a what I thought was a good point. He or she pointed out that all of those houses that are being owned by a small-time landlord and subsequently leased out are houses that are out of the pool of available properties for people to own and, possibly, redevelop into more dense or different housing styles. Ownership and renting in this way contributes to the upward spiral of housing prices: a person has owned a house in an area for a while and then moves out. Instead of selling, that person rents out the house while, in all probability, having purchased another house in the same area. As the first house's mortgage is paid down by outside rent, the small-time landlord has even less incentive to sell because, hey, "free"[0] money. Lather, rinse, repeat for an entire metro area and it's just as good a contributor to tight owned housing availability as the specter of foreign investors swooping in or people moving from other regions of the United States. And it reduces the pool of houses that could be used for someone to buy[1] into a market.

0 - I know that being a landlord incurs costs and that not all landlords, especially small landlords, make money on the deal but many obviously do because to do otherwise would be financially foolish.

1 - There's a really good argument to be had about whether or not ownership of one's residence is a good thing for society at large. I happen to think that yes, it is, but that the pool of "culturally acceptable residences" must be expanded beyond "detached house with fenced yard, large driveway, and bountiful on-street parking directly in front of the structure." Point being, people want to have stability in where they live and there's a wide gulf between "5,000 square foot minimum lot size" and "downtown condominium high-rise" that is not being served in many metropolitan areas.

Can you provide the link to that thread/comment? It sounds like they've made the argument I've been trying to make to my peer group (and their parents, who explicitly encourage this "buy a house/never sell it, but rent out/etc" behavior)--but have done so elegantly.

I'd love to see how they put it, so I could explain to others why these schemes to "invest" end up hurting the city when they play out at large.

I went looking but can't find the thread again. It was on the Seattle-themed subreddit so there's a better than even chance that it was yanked by one of the overbearing moderators there.