In parts of the country, some sellers are increasingly throwing in the towel when their attempt to sell their home languishes, even after cutting prices. They take their homes off the market and list them as rentals, hoping to cover the cost of the mortgage, while moving on to a new home or another area. The Wall Street Journal reports that 2.2% of rental listings on Zillow were previously listed for sale, and this number has increased since late 2022, when mortgage rates rose to 7% and above.
But there are challenges. Usually, when selling a home, a real-estate professional handles the process. But being a landlord often means getting your hands dirty. There is also ongoing maintenance, like repairing a stove or replacing a refrigerator.
Renting out your property also comes with financial risks, including damage to the home, or disputes with tenants that many homeowners never imagined they would be in, like evicting a tenant or being sued.
It makes more sense for some homeowners than others. Those who brought their homes when mortgage rates were low can often charge rents that fully cover their monthly costs. But homeowners with high rates might be left making up the difference in the monthly payment.
After dealing with the hassle of deep-cleaning houses between tenants, some owners wish they had sold them, even at a reduced price, and moved on. So they smarten up their properties to relist their homes. About 3.5% of active listings in January had been delisted last year. This is the highest rate for any January in data going back to 2016, according to Redfin.