Yeah, but they still have a place to live. If the landlord is losing money on their asset, what's one place they could make up the difference?

The landlord isn't losing money. Totally different cost basis. The landlord rarely has a carrying cost that is equivalent to the renter buying the same property with a mortgage. It is frequently half that or less.

I've sold a home I lived in to rent something equivalent because the rental rate was a fraction of my carrying costs. Saving the difference in costs added more to my net worth than the appreciation on the property.