Maybe OP is saying when you buy from a landlord, they still get their profit (you pay them the NPV of the expected future rents - it's neutral from their perspective).

In cases like your example, what forces landlords to lower the rent? Usually only a) cost of credit, as you said b) opportunity cost, and c) government intervention [land tax, property tax].

a) not all landowners have mortgages! many own outright. they make pure profit b) the game theory of this case is frequently misunderstood, landowners are a monopoly and are strongly incentivized to act as a cartel. same principle as walmart destroying old stock.

Landownership is one of the most lucrative and profitable enterprises in (American) history, so you might want to question the logic which has convinced you that market dynamics is so effective in taking its profits.