There is an article on MSNBC which talks about the pressures facing condo conversion owners. Properties are being turned in to rental units so that the owners do not face foreclosure, unfortunately resulting in a negative cash flow for them. Here is the interesting part: “because many of these investors will be renting out their units, Markstein said, the inventory will swell again, and competition will force rental rates down.”

Will rising interest rates push apartment demand and rental prices up? Or could excess inventory even things out a little? I think that the answer depends largely on geography.

For the record, I predict at least another rate hike by the US Fed followed by a pullback in 2007.