The rise of “accidental landlords” that seriously affect the supply of housing in America – what owners and tenants need to know

Mortgage fees are stubbornly high, and home affordability is out of reach for many buyers, making new types of rental competition appearing in some of the country’s hottest housing markets.

“The worsening supply and demand for SALE is creating new institutional competitors: contingent landowners,” a recent report by Parcl Labs said.

These “accidental landlords” were homeowners who tried to sell but were unable to get the price they wanted, and instead decided to rent the house until conditions improved.

“If these home sellers can’t find a buyer, they face three options: register and wait, reduce prices to find clear levels of the market, or convert them to rental. The last option creates the term “accidental landowner” in PARCL Labs.

This is a growth trend that could quietly disrupt the detached home rental market and put pressure on landlords at large facilities such as Invitation Homes, American Home 4 rentals, and progressive housing.

This phenomenon is most concentrated in the same metros where facility landlords have historically built large portfolios: Atlanta, Dallas, Houston, Phoenix, Tampa, and Charlotte. According to Parcl Labs, these six cities are representative 36.8% of all institutions across the country own detached home rentals.

But these same cities are now seeing a pile of household lists, with homeowners pulling the list and instead turning it into rentals.

Houston and Dallas saw the biggest increase in homes that failed to sell and converted to rentals, followed by Tampa, Phoenix and Atlanta. The outlier, Charlotte, saw a slight decrease in the number of homes that actually failed to sell.

Meanwhile, single-family home inventory has risen sharply from the previous year, showing an average increase of 32% in these major cities.

This trend is part of a broader modification of the US housing market where fewer people can or are willing to sell due to a high mortgage rate.

Many owners who bought or refinanced during the pandemic at a 4% interest rate are reluctant to sell and underwrite new loans at 7% or more. The so-called “lock-in effect” forces more and more people to become landlords by default.