More Homeowners Becoming Landlords

Low mortgage rates coupled with sky-high rents are convincing more and more homeowners to rent out their former residences when they trade up rather than sell them. According to Redfin, 19 percent of current homeowners either bought or refinanced homes between 2011 and and last year — when 30-year mortgage rates were less than 3.4 percent. Rents have increased by nearly 20 percent nationwide since mid-2006, while home prices remain nearly 21 percent below what they were at that time. Renting helps soften the blow for many people who are still upside-down on their home loans and unable to profit from a sale. At the same time, there are some disadvantages to becoming a landlord. Not only are owners on the hook for any repairs that need to be done, they also have to deal with often demanding tenants and cover expenses even when the property is vacant. Most landlords are benefiting from the move, however, although it may be hurting the housing market. The trend means fewer homes going on the market which, according to Redfin CEO Glenn Kelman, is “a major reason we have low inventory and limited sales growth.” | Read More