Pros and Cons of Renting Your Home Instead of Selling

Typically, homeowners anticipating a move will seek to sell their current home, often needing the cash from the sale to help purchase their next home. Sometimes, circumstances Learn how we can help have homeowners wondering what the pros and cons of renting your home are and whether it’s feasible to turn the old home into an investment funded by renters.

Market overview for renting and selling
Rising rents and fewer vacancies trending in rental market
The rental housing market rebounded in 2021 with higher rents and lower vacancy rates as lack of for-sale properties prevented higher-income renters from becoming homeowners, according to America’s Rental Housing 2022 report by the Harvard Joint Center for Housing Studies.

The median rent in December 2021 for a one-bedroom apartment was up over 11 percent from the previous year, reports Zumper’s National Rent Index. The rental platform predicts rents will continue to rise in 2022 due to strong demand outpacing supply. In April, the median one-bedroom rental reached an all-time national high of $1,410, up 3.2% for this year so far and 13.2% year over year. Two-bedroom rental prices set a new record, rising 14.6% from last year to $1,746.

Home sales slow down as mortgage rates and prices increase
While 84% of agents surveyed by HomeLight expect the seller’s market to continue into 2022, prices are not expected to rise as quickly or as dramatically as in the previous year. One-third of agents anticipate price increases above normal in their market, while 39% expect typical growth rates of 2%-3%. Only 4% believe that prices will skyrocket by double digits.

Demand for existing homes has slowed nationwide with sales falling in March for a second month in a row to a seasonally adjusted annual rate of 5.77 million, according to the National Association of Realtors® (NAR). Sales declined 2.7% from February and 4.5% from the previous year, although the median price rose to $375,300 — 15% higher than March 2021. Total housing inventory also dropped 9.5% from 2021. Declines in the number of sales across US housing market regions reflect evolving market conditions.

Pros of renting out a house
While constrained inventory, rising interest rates, and skyrocketing prices have forced many people to put off their aspirations of owning a home, a recent Zumper survey of renters indicates that 81.6% of respondents plan to move in the next 12 months. This opens the door for potential tenants to rent your property.

If you live in one of the country’s hottest rental markets, becoming a landlord could be a profitable venture. New York City ranked highest on Zumper’s top 10 list for one-bedroom median rentals in April 2022 with rent of $3,420 followed by San Francisco, Miami, Boston, San Diego, San Jose, Los Angeles, Washington, DC, Oakland, and Fort Lauderdale.

Homeowners in the suburbs may also see an influx of prospective tenants as higher-income households leave cities in search of more spacious single-family rentals. Renters outnumber homeowners in 103 suburban areas including those surrounding Miami, Washington, D.C., and Los Angeles with 57 more expected to have a renter majority in the next five years, according to apartment listing service RentCafe.