If cash flow doesn't exist in your market, what many investors do is invest in smaller more affordable markets with a favorable price to rent ratio.3.

They exist in CA but I am not sure if it exists out of state.

100%, that is for sure an option that always exists but I am mainly discussing on market/MLS properties but at the same time, with more inventory and slower market, even the off market/verified lists take longer to sell which gives investors that extra time to get this research done correctly. 

We have operated STRs since 1999 and they had been around long before then (STEs have existed for many decades).  

For example ~$650K homes (previously closer to $800K) can consistently produce $100K in annual income, and the deals start to pencil again.For existing investors, or local vendors, do you agree with this sentiment?

I recently purchased a 2 unit property with one existing tenant (bottom unit) that seems solid and so far pays on time and one that recently moved out (upper unit) on a month to month lease.

Last year I did a rehab where we added a half bathroom out of existing space.  

For lenders - most notes would be held to maturity and second position liens could become more popular to bridge gaps between purchase prices and existing mortgage balances.  

The U.S. housing market will finally turn the corner in 2026, with a double-digit increase in home sales supporting a 4% increase in home prices, according to new predictions from the National Association of Realtors®.NAR Chief Economist Lawrence Yun forecasts sales volume for existing homes will rise 14% next year after three years of stagnation, and sees new-home sales rising 5%.

As long as we exist in a Resource based system, money will exist.