Home News In a Slowing Housing Market, Sellers Ask: Why List a Home When You Can Collect Rent?

In a Slowing Housing Market, Sellers Ask: Why List a Home When You Can Collect Rent?

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The couple put their house in the Los Angeles suburbs up for sale this summer after Marc and Melissa Reichhardt moved to Dallas from California. was.

Instead, they decided to rent a house. Monthly payments now cover the cost of ownership.if Housing market remains weakReichert said they will likely keep the home as a rental after the current two-year lease expires.

“We just don’t have serious buyers,” he said.

Home sellers across the United States, discouraged by the slowdown in the housing market, are increasingly choosing to keep their homes and lease them instead so they can profit from the burgeoning residential rental market.

higher mortgage interest rates Home-buying demand has declined and homes have been on the market for longer. house prices fell Some markets are far from the spring peak and some sellers are reluctant to lower their asking prices.

and with many potential homebuyers off-market priceRents for single-family homes have skyrocketed in recent years.

Melissa and Mark Reichert decided to rent a house in California after moving to Dallas.


Photo:

Vicky Odle

Supply is being pulled from the for-sale market just as the number of homes for sale began to rise from record lows as prospective sellers move from selling to renting. The tight supply of homes for sale is a big reason prices continue to rise even as sales decline.

According to brokerage HouseCanary, the number of home listings delisted without a deal in August increased 58% year-on-year, but the overall number remains a tiny fraction of the total listings.

The phenomenon of delisting and lending has become so prominent that John Burns Real Estate Consulting asked 1,000 real estate agents for the first time. Their numbers varied widely by region, but were significant in some popular markets. In Southern California, his 10% of home sellers switched properties from for sale to rent, and in Texas he switched 9%, according to the survey, due to rising mortgage rates.

“People hear that rents are going up, so they say, ‘If I can’t sell it for the price I want, I’ll rent it out because I’ll get really good rent,'” he said. I was. Anthony Ramakia, who owns a real estate brokerage and property management firm based in Waltham, Massachusetts.

Homeowners often rely on the down payment on the proceeds of a home sale or to qualify for a mortgage to purchase a new home.In recent years, new companies and products have emerged to help homeowners buy before sellor buy without selling at all.

Economists have long said that renting and investing in the stock market is a better investment than owning a home, and that could be especially true in 2022. The WSJ’s Dion Rabouin said: is explained.Photo illustration: Elizabeth Smerov

“In a market that is flat or falling, there are probably a lot of people who don’t want to sell right now,” said David Friedman, CEO of Boston-based Knox Financial. Other services for homeowners who want to convert their homes into rental properties. “We certainly expect people to decouple when they buy and when they sell, and one way to do that is by leasing.”

Many homeowners keep their borrowing costs below current average mortgage rates. By choosing to become a landlord, the would-be seller is betting that they can profit from the value of their home if rents continue to rise while mortgage payments remain fixed.

Chris Harden, a broker and real estate manager at Re/Max Four Corners, a suburb of Dallas, said, “Last year we leased a property for $1,500, and now it’s jumping from $300 to $400 a month.

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Owning a rental property entails risks such as trouble with tenants, unexpected repair costs, and a slump in the rental market. Real estate agents say many who rent out their former homes are likely to sell them if sales pick up, while others may choose to keep them as rental properties indefinitely. There is

In the expensive suburbs of Silicon Valley, Coldwell Banker Realty agent Ramesh Rao said it has become more common for people to choose the rental option when moving into a new home.

“They feel their concerns as landlords are minimized because they can expect high quality tenants,” Rao said.

Converting a former home to a rental also helps homeowners avoid local home sales taxes, Rao said.

An increase in rental inventory could help level off rental growth. Nationwide, single-family home rents rose 13.4% year-on-year in June, up slightly from 14% year-on-year in April, according to housing data firm Core Logic.

However, demand from renters is still increasing. According to a survey by John Burns Real Estate Consulting, 11% of prospective home buyers nationwide switched from wanting to rent a home in his July. In Texas, 24% of buyers switched to renting, the highest in the nation.

write destination Nicole Freedman [email protected] and Will Parker [email protected]

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