Lots of would-be sellers want to avoid price hits in today’s market. Some are imparting a new strategy: holding properties and renting them out, the Wall St. Journal reported.
Higher mortgage rates have slowed home-buying demand. Homes are lingering on the market longer. More sellers are expected to drop their asking prices.
Many prospective buyers priced out of the market. As such, rents for single-family homes have increased, according to the article.
John Burns Real Estate Consulting surveyed 1,000 real estate agents about the seller-turned-landlord trend, the Journal said. Numbers varied by region. In Southern California, 10% of home sellers switched listings from for-sale to for-rent. In Texas, 9% did so.
“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,’” Anthony Lamacchia, owner of a Waltham, Mass.-based real-estate brokerage and a property-management company, told the Journal.
Still, owning rental property can be risky, especially if rents start to turn and the market slows down.
The article cites several real-estate agents. Some said many renting out their previous homes are likely to sell once sales rebound. But others could maintain them as rental properties indefinitely.
At the moment, rentals are in high demand. The survey found that 11% of prospective home buyers nationally switched in July from wanting to buy a home to renting instead, according to the article.