# Why are more people renting out their homes instead of selling? By Sarah Sharkey | 2022-10-28 > Some would-be sellers are choosing to rent out their homes instead of facing a slow housing market. ## Key Takeaways ## Key Takeaways - Rising mortgage interest rates can price many would-be homebuyers out of the market.  - A decreasing number of buyers means sellers may not have the upper hand.  - Some sellers are postponing selling their homes and renting them out instead. Nearly [60% of U.S. mortgage holders](https://www.fhfa.gov/data/national-mortgage-database-aggregate-data) currently have an interest rate below 4% — a rate most couldn't come close to matching if they sold and bought again today. That single statistic helps explain one of the biggest shifts in residential real estate: more homeowners are choosing to rent out their homes instead of selling them. Whether driven by finances, market timing, or life circumstances, the rent-instead-of-sell trend is reshaping how people think about their biggest asset. So should *you* rent or sell your house? The answer depends on your financial picture, your tolerance for landlord duties, and what the market looks like in your area. Below, we break down what's driving this trend, who it benefits most, and how to make the right call for your situation. [Get your offer](#) ## What's Driving the Rent-Instead-of-Sell Trend? There's no single reason homeowners are holding onto their properties. Instead, several market forces are converging at once. ### The Mortgage Rate Lock-In Effect This is the biggest driver. Homeowners who locked in mortgage rates between 2.5% and 4% during 2020–2022 face a painful math problem: selling means giving up that rate and financing their next home at [today's rates near 6.5–7%](https://www.freddiemac.com/pmms). For many, that difference adds hundreds of dollars to a monthly payment — even on a less expensive home. Renting out the current property lets owners keep that low-rate loan working in their favor while generating monthly income. ### Strong Rental Demand and Rising Rents Rental demand remains elevated across most U.S. metros. According to [Zillow's rental market data](https://www.zillow.com/research/data/), the typical U.S. asking rent has climbed roughly 30% since 2020. High homebuying costs are keeping more people in the rental market longer, which means landlords in many areas can charge enough rent to comfortably cover their mortgage, taxes, and insurance — and still pocket a profit. ### Home Values Are Holding — No Rush to Cash Out Despite fears of a correction, [national median home prices](https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales) have remained stable or continued modest growth. When owners don't feel urgency to sell before a downturn, renting becomes an attractive way to let equity continue building while collecting passive income. Understanding the [factors that influence your home's value](https://www.opendoor.com/articles/factors-that-influence-home-value) can help you gauge whether holding makes sense in your specific market. ## 2025–2026 Market Conditions: Why Some Owners Are Waiting If you're wondering why not sell your house in 2026, you're not alone. Several current conditions favor a hold-and-rent strategy for certain homeowners: - **Inventory is still low.** Limited housing supply means your property likely hasn't lost value — but it also means finding your *next* home would be expensive and competitive. - **Rate cuts remain uncertain.** While the Federal Reserve has signaled potential easing, mortgage rates haven't dropped enough to make selling and rebuying painless. - **Rental yields are attractive.** In many markets, gross rental yields of 5–8% outperform what homeowners might earn by investing sale proceeds elsewhere after taxes and [closing costs](https://www.opendoor.com/articles/how-much-are-closing-costs-for-seller). That said, markets vary enormously. Before deciding, get a realistic sense of [what your home is worth](https://www.opendoor.com/articles/whats-your-home-worth-take-these-steps-to-find-out) and compare it against what you could charge in rent. ## Are You an "Accidental Landlord"? Not everyone who rents out a home planned to become a landlord. An **accidental landlord** is someone who ends up renting their property due to circumstances — a job relocation, an inherited home, a relationship change, or simply a market where [their house won't sell](https://www.opendoor.com/articles/cant-sell-my-house-why-its-happening-and-how-to-fix-it) quickly enough. If this sounds like you, here's what you should know: - **You'll need landlord insurance**, not a standard homeowner's policy. Your current coverage likely won't protect you once a tenant moves in. - **Rental income is taxable**, but you can deduct expenses like maintenance, property management fees, mortgage interest, and depreciation. - **Tenant screening matters.** A bad tenant can cost thousands in missed rent and property damage. Consider hiring a property manager if you've relocated far from the home. - **There's a capital gains clock ticking** — more on that in the tax section below. ## Rent vs. Sell — How to Decide What's Right for You The rent vs. sell house decision isn't one-size-fits-all. Here's a framework to help you evaluate both paths. ### Financial Factors to Weigh | **Factor** | **Favors Renting** | **Favors Selling** | | **Monthly cash flow** | Rent covers mortgage + generates profit | Rent wouldn't cover carrying costs | | **Equity access** | You don't need the cash now | You need proceeds for your next home or other goals | | **Local rent-to-price ratio** | High (strong rental yield) | Low (selling unlocks more value) | | **Tax implications** | You're within the capital gains exclusion window | You risk losing your Section 121 exclusion (see below) | | **Appreciation outlook** | Home values are rising in your area | Market is flat or declining locally | ### Lifestyle and Practical Factors - **Distance from the property.** Managing a rental from across the country is harder — and property management typically costs 8–10% of monthly rent. - **Your time horizon.** Planning to move back in 2–3 years? Renting makes sense. Never coming back? The long-term landlord commitment may not be worth it. - **Your stress tolerance.** Midnight maintenance calls, tenant turnover, and vacancy periods aren't for everyone. Be honest about whether you want this responsibility. If the comparison is leaning toward selling, start by understanding the [full cost of selling a house](https://www.opendoor.com/articles/how-much-does-it-cost-to-sell-a-house) so you can compare net proceeds against projected rental income. ## Tax and Financial Considerations You Shouldn't Ignore Taxes are where the rent-vs-sell decision gets complicated — and where many homeowners make costly mistakes. - **Capital gains exclusion (Section 121).** If you've lived in your home for at least 2 of the last 5 years, you can exclude up to $250,000 in gains ($500,000 for married couples) when you sell. But once you convert to a rental, that 5-year clock keeps ticking. Rent for too long and you'll lose this exclusion entirely — potentially owing tens of thousands in taxes. - **Depreciation recapture.** While you can deduct depreciation on a rental property each year (reducing your taxable rental income), the IRS will "recapture" that depreciation when you sell — taxed at up to 25%. - **Rental income taxation.** Net rental income is taxed as ordinary income. Make sure you're accounting for all deductible expenses to offset this. **This isn't tax advice.** Talk to a CPA before making your decision, especially if your home has appreciated significantly. The tax implications alone could tip the scales toward selling sooner rather than later. ## When Selling Still Makes More Sense Renting out your home isn't always the smart play. Here are scenarios where selling is likely the better move: - **You need the equity.** Whether it's funding your next down payment, paying off debt, or accessing retirement savings, a sale gives you a lump sum that renting can't match. - **You don't want to be a landlord.** There's real value in simplicity. Managing a rental — even with a property manager — takes time, attention, and emotional bandwidth. - **You're relocating permanently.** If you have no plans to return, long-distance landlording introduces risk and hassle that may not justify the returns. - **Your local market has peaked.** If your area is showing signs of softening and rental yields are thin, locking in today's value could be the smarter financial move. Timing matters — explore the [best time to sell a house](https://www.opendoor.com/articles/best-time-to-sell-a-house) for more on seasonal and market trends. If selling is the right path, you don't have to navigate a complex traditional process. See [how selling to Opendoor compares to a traditional home sale](https://www.opendoor.com/articles/how-selling-to-opendoor-compares-to-a-traditional-home-sale), or learn [how to sell your house](https://www.opendoor.com/articles/how-to-sell-your-house) step by step. You can also [get a no-obligation cash offer from Opendoor](https://www.opendoor.com/articles/sell-your-house-for-fast-cash-with-Opendoor) to see what your home could sell for — even if you're still weighing your options. [Get your offer](#) ## Frequently Asked Questions ### Is it better to rent out your house or sell it? It depends on your financial situation, local market, and personal goals. Renting is often better if your mortgage rate is low, rental demand is strong, and you don't need immediate access to your equity. Selling typically makes more sense if you need liquidity or don't want landlord responsibilities. ### How long should you rent your house before selling? There's no single answer, but watch the capital gains exclusion clock. Under IRS Section 121, you must have lived in the home for 2 of the last 5 years to qualify for the exclusion. Renting for more than 3 years after moving out could cost you the tax break. ### Do I have to pay capital gains if I rent my house first? Possibly. If you sell within the 5-year window and meet the 2-year residency requirement, you can still claim the exclusion. Rent too long and you'll owe capital gains taxes on your profit. Consult a CPA for your specific situation. ### What is an accidental landlord? An accidental landlord is someone who didn't originally plan to rent out their property but ended up doing so due to circumstances like a job relocation, inheritance, market conditions, or difficulty selling. ### Should I sell my house in 2026 or wait? It depends on your local market and personal timeline. National home values remain stable, but if mortgage rates drop, more buyers may enter the market — potentially increasing your sale price. Consider [whether now is the right time to sell](https://www.opendoor.com/articles/should-i-sell-my-house) based on your circumstances. ### How much does it cost to sell a house? Sellers typically pay 8–10% of the sale price in total costs, including [agent commissions](https://www.opendoor.com/articles/who-pays-real-estate-agent-commission), closing costs, repairs, and staging. Understanding the [full cost of selling](https://www.opendoor.com/articles/how-much-does-it-cost-to-sell-a-house) helps you compare net sale proceeds against potential rental income. ### Can I rent out my house if I still have a mortgage? In most cases, yes — but check your loan terms. Some mortgage agreements include occupancy clauses that require you to live in the home. Violating these terms could trigger penalties. Contact your lender before listing the property as a rental. ### What should I do if I can't decide between renting and selling? Start with the numbers. Find out [how much your home is worth](https://www.opendoor.com/articles/how-much-is-my-house-worth-7-ways-to-find-out-your-homes-value), estimate your potential rental income, and calculate your carrying costs. If selling comes out ahead — or if you simply want a clean break — [request a cash offer](https://www.opendoor.com/articles/what-is-a-cash-offer-in-real-estate-and-why-consider-it) to see where you stand. --- *Originally published at [https://www.opendoor.com/articles/briefs/more-people-renting-out-homes-instead-of-selling](https://www.opendoor.com/articles/briefs/more-people-renting-out-homes-instead-of-selling)*