Some sellers have always opted to rent out their old home rather than sell, but skyrocketing rents have pushed even more into that landlord category.
NEW YORK – With single-family home rents skyrocketing and many prospective buyers priced out of the market, renting out an old home has, to some sellers, become more attractive than selling. The result: A shrinkage in listings of homes for sale, which causes prices to rise even as sales lag.
Brokerage HouseCanary reports that the portion of home listings delisted without going under contract climbed 58% in August from a year earlier, although the overall number remains a small percentage of total listings.
“People are hearing that rents are going up, so they’re saying, ‘Well if I can’t sell it for what I want, I’ll just rent it, because I’ll get a really good rent,’” says Anthony Lamacchia, owner of a real-estate brokerage and a property-management company in Massachusetts.
Many homeowners have locked in borrowing costs below the current average mortgage rate, and by opting to rent, would-be sellers are wagering they can still profit from their home’s value if rents continue to appreciate while their mortgage payments remain fixed.
Real-estate agents note that many people choosing to rent out their previous homes consider it a temporary move, and they’re likely to list the home once sales bounce back. Some, though, could elect to rent indefinitely.
CoreLogic estimates that rents for single-family homes rose 13.4% nationwide in June from a year earlier, versus 14% year-over-year growth in April. Yet demand from renters is still gaining, with a John Burns Real Estate Consulting survey finding that 11% of prospective U.S. homebuyers nationally put their ownership dreams on hold and committed to renting again.
Source: Wall Street Journal (09/19/22) Friedman, Nicole; Parker, Will
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