Its entirely possible I suppose that the person who bought and started renting it out paid cash or put a higher than normal amount down to where holding the property is cash flow positive. Average down for a rental condo is probably 25% right so do the math from there.
Some of the places where prices are already crazy, like orange county, have never been cash cows as far as rent goes. But at the same time the property values are very resilient and likely to appreciate a lot over a long enough horizon. So for those with deep pockets they are still desirable. It is also super easy to find renters for condos in some nice areas.
I do think there are some in the category of wanting to hold onto a quality asset and are willing to accept lack luster cash flow.
Most cities where people are worried we are in a bubble, like my area San Diego, are at the very least terrible sellers markets and honestly have been since at least 2013. Buying right now definitively sucks. Everything nice is bid up with many offers. And there are few reasonable places on the market at the starter home end.
I doubt we are at the peak of housing bubble sadly, though a stock crash or tech crash, could hurt housing prices I suppose by killing jobs. But places like San Diego, if current price trends continue, every year the passes makes it more likely that we are.
If lending regulation remain tight to prevent a bubble we should see price increases level off assuming people with incomes are getting priced out of buying by debt ratio limitations. The alternative is that wild speculation or lending loosens so that unqualified people or rich people can bid up housing further. I kind of see the later happening.
This winter will be real interesting when the Fed starts its QE unwind. So far mortgage interest rates, stocks and bonds have all pretty much ignored rate hikes from the Fed. If that changes and for instance mortgage interests rates start to go up things could get crazy.
