It’s becoming more challenging to sell homes due to increased supply, high mortgage rates, and decreased consumer confidence. Some sellers are opting to rent out their properties instead. Institutional investors in rental markets may face competition from accidental landlords in markets like Atlanta, Phoenix, and Dallas with significant inventory growth.
Garret Johnson faced difficulty selling his Dallas home and decided to rent it out instead. Despite not covering his mortgage with rent, Johnson made adjustments to recast his loan, lower payments, and save on insurance. He plans to hold onto the property for several years.
The inventory of homes for sale has been rising, especially in Sun Belt markets, causing homes to sit on the market longer. This influx of for-sale properties into the rental pool could impact landlord pricing power, potentially limiting rent increases for landlords like INVH and AMH.
Single-family rental REITs are selling more homes than they’re buying, focusing on build-to-rent projects instead. While this strategy may mitigate risks from accidental landlords, larger landlords may still face occupancy declines and revenue optimization challenges due to increased supply in the rental market.
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