I think you’re touching on a lot of things here which form a self reinforcing web

A) pensions don’t exist so people need cashflow to retire. You either save enough capital that you can build an annuity for yourself or you have cash flow investments and the lowest effort one is rental properties.

B) taxes for capital gains on a home that’s appreciated enough incentive rolling your home into a rental then rolling it into more rentals as it appreciates further afield into lower cost areas. The basis isn’t taxable as long as you roll it to another investment, and as prices go up, you are incentivized to move it into more properties to diversify at lower rents but more units. As that effect continues as people retire the cost of rentals further from the city core keeps rising. An easy fix would be to raise the capital gains deduction for a primary residence to incentive retirees to outright sell and take the annuity option, which is actually easier overall but the capital gains tax makes it unattractive today.

C) Obviously the financing your described, but compounded by private equity and hedge fund dominance in the unit and development rental market skewing towards higher margin lower occupancy developments. The marginal cost of a mass produced “luxury” rental allows for a lot of vacancy, compounded by the IO and other benefits to reduce vacancy load costs. There are also tax benefits to vacancy that improve as your portfolio gets larger. I think this is more than the retiree effect honestly, I think funds dominate large developments now and increasingly unit level portfolios.

D) The rezoning effect is IMO making it worse because it’s making the optionality of low density developments greater allowing for land value appreciation that wouldn’t happen otherwise because of (C). It’s taking a property with lower utility and making it more valuable for a larger development, but there’s no incentive to make the development more affordable per unit. Instead it increases the price per square foot of property value, increasing costs for everyone, while marginally increasing units but they’re constructed and priced to keep price per square foot of livable areas equal or increasing.

I think (A) can’t improve without a real social security system that replaces pensions. (B) can’t improve without tax reform realizing the nominal cutoffs don’t account for inflation and aren’t “rich” taxes any more but retiree taxes. (C) is probably intractable without socialist regulations which are perceived as unfair, and are hard to craft in a way that is not in fact unfair or have unintended consequences (D) is hard because it’s actually a demonstration of the unintended consequences of regulation and ethical capitalism - but the effect is paradoxical.

These are all structurally hard problems and they aren’t made better by the rate of global population growth. There are way more people today than there were before, and economic activity is much denser than before. The urban areas are crushed, and the rural areas empty except for a hoary crust of MAGA with disproportionate state and federal power. It is frustrating all over - and I don’t see an end state that is very positive.

Your points seem to be valid. I don't have a solution either.

Where I live used to be the rural area that people made fun of you for being from (Idaho). Also, my county is 70%+ MAGA voters. So I understand your point about disproportionate amount of power...that is another topic entirely (as is the Redoubt movement and other things attempting to profit off the imbalance).

This is happening everywhere around me. Montana is just as bad. Locals have nowhere to go and cannot afford to stay.

I don't have a solution...just pointing out my observations of the issues I have encountered personally.