Why owners rent for less then cost. Please feel free to add any other reasons.
It's also because it can be an overly competitive rental market. It's based on the age-old marketing law of supply and demand. If the supply exceeds the demand, like it is for most rentals available, then the rental prices are going to plummet.
Let's say I have a week that I want to rent out. My MFs are $1000. There are other owners in the same boat in the same area. Let's say, for round numbers and argument's sake, there are 100 owners (myself included) who want to rent out their week but there are only 90 people who want to rent. What do I have to do to be one of the 90 owners who get at least
some money for their week and not among the 10 who get
nothing? The answer: Price it below what the others are charging.
Unfortunately for me and the other owners, there are 99 other owners who are thinking the same thing. Hence, a "reverse" auction ensues. Owners are going to undercut other owners in their prices, even if it means charging less than the MFs. Even if I have to price mine at $800 when everyone else is listing for $900 or more, I'd rather get $800 than be stubborn and get nothing.
Remember, the renter(s) do not care one iota what the owners pay in MFs. They just want to pay the lowest price.