Every discussion of "The American Dream" revolves around home ownership, although many would argue that the quest for universal home ownership contributed to our current financial crisis.

When politicians and the press talk about housing today, they invariably talk about homeowners at risk of foreclosure, and heaven knows that's an important topic, particularly for the people affected directly. But there's more to the housing market than primary residences.  Many Americans own a rental property in addition to their own home, and many investors devote a significant proportion of their portfolio to real estate holdings.  For better or worse, real estate prices depend on these people's actions too.

Homeowners and landlords generally pursue different goals through home ownership. Landlords seek a profitable return on their investment, while homeowners seek long-term security and a roof over their heads. A confusion of these goals created tremendous excess debt over the last decade as people mistakenly viewed their houses as annuities rather than homes.

Investors make up enough of the real estate market to influence the timing and scope of its recovery.  Forestalling foreclosures will save families, but will only go so far toward stabilizing the market and getting houses selling again.

Until rents go up or prices come down, houses and commercial buildings are not the best use of investors' money. At current lending rates, I think landlords need annual rents equal to or above 6.5% of the purchase price to earn a profit after taxes and maintenance. That means if you pay $1,000,000 for a home or office building, you need rents of  $65,000 a year - or $5416 a month -to cover costs and make a little profit.

Naturally, this relationship varies by location, but generally speaking, I don't think we'll see a widespread recovery in the real estate market until the rents and prices combine to deliver that 6.5% return. Owners hoping to sell properties right now should consider this equation when setting a price.