In a Slowing Housing Market, Sellers Ask: Why List a Home When You Can Collect Rent?

After Mark and Melissa Reichert moved from California to Dallas, the couple put their home in the Los Angeles suburbs up for sale this summer. Yet even after they cut the asking price by $10,000, there was hardly any interest.

Instead, they decided to rent out the house. Their monthly payout now covers their ownership costs. If the housing market remains sluggish, they would likely keep the home as a rental once the current two-year lease expires, Mr. Reichert said.

“There’s just not serious buyers out there,” he said.

Home sellers across the U.S., discouraged by the slowing housing market and able to capitalise on the soaring home-rental market, are increasingly opting to hold on to their houses and lease them out instead.

Higher mortgage-interest rates have reduced home-buying demand, and homes are sitting on the market for longer. Home prices have slid from their springtime peaks in some markets, and some sellers are reluctant to lower their asking prices.

And with many prospective home buyers priced out of the market, rents for single-family homes have soared in recent years.

As prospective sellers shift from selling to renting, that is pulling supply out of the for-sale market, just as the number of homes for sale was starting to rise from near record lows. The tight supply of homes for sale is a big reason why prices continue to climb even as sales decline.

The number of home listings that were delisted without going under contract rose 58% in August from a year earlier, though the overall number remains a small portion of total listings, according to brokerage HouseCanary.

The phenomenon of delisting and renting out has become noticeable enough that John Burns Real Estate Consulting asked 1,000 real-estate agents about it for the first time. The numbers varied widely by region but were significant in some popular markets. In Southern California, 10% of home sellers switched their listings from for-sale to for-rent due to higher mortgage rates, and 9% in Texas did so, according to the survey.

“People are hearing that rents are going up, so they’re saying, ‘Well if I can’t sell it for what I want, I’ll just rent it, because I’ll get a really good rent,’” said Anthony Lamacchia, who owns a Waltham, Mass.-based real-estate brokerage and a property-management company.

Homeowners often rely on the proceeds of a home sale for a down payment or to help them qualify for a mortgage to purchase a new home. New companies and products have sprung up in recent years to help homeowners buy before they sell, or buy without selling at all.

“In a market that’s flat or down, you are going to have a lot of people who probably don’t want to sell right now,” said David Friedman, chief executive of Boston-based Knox Financial, which offers loan products, property management and other services to homeowners who want to turn their homes into rental properties. “We certainly expect people to decouple when they buy from when they sell, and part of the way to do that is to rent.”

Many homeowners have locked in borrowing costs below the current average mortgage rate. By choosing to become landlords, would-be sellers are betting they can still profit from the value of their house, if rents continue to rise while their mortgage payments remain fixed.

“Properties that we were leasing out for $1,500 last year now have pushed up by $300 to $400 a month,” said Chris Harden, broker and property manager at Re/Max Four Corners in the Dallas suburbs.

Owning rental property comes with risks, including disputes with tenants, unexpected repair costs or a slowdown in the rental market. Real-estate agents said many people renting out their previous homes are likely to sell once sales rebound, though others could choose to maintain them as rental properties indefinitely.

In the pricey suburbs of Silicon Valley, Coldwell Banker Realty agent Ramesh Rao said it is becoming more common for people to choose the rental option when they move to a new home.

“They feel that the concern of being a landlord is very much minimised, given the high quality of the tenant they can expect,” Mr. Rao said.

Turning their previous homes into rentals also helps homeowners avoid local home sales taxes, which can add up to a percentage point or more of the sale price, Mr. Rao said.

An increase in rental inventory could help flatten rent growth. Rents for single-family homes nationally rose 13.4% in June from a year earlier, slightly off from 14% year-over-year growth in April, according to housing-data firm CoreLogic.

Demand from renters, however, is still growing. The John Burns Real Estate Consulting survey found that 11% of prospective home buyers nationally switched in July from wanting to buy a home to renting instead. In Texas, the share of buyers switching to renting was 24%, the highest in the nation.

Did your mum ever suggest a warm glass of milk to help you sleep?

Science says she may be right.

An emerging field of research called chrononutrition indicates that choosing the right foods and meal times may improve our sleep . Some key findings: Eat dinner early. Keep consistent schedules. And, yes, drink milk.

You already know that fruits, veggies and lean protein are good for your health. But they can boost your sleep, too. These foods are the basis for the Mediterranean diet, which research shows may improve sleep quality, reduce sleep disturbances and boost sleep efficiency—the amount of time you spend asleep when you are in bed.

Eating a Mediterranean or other similarly healthy diet is linked to a reduction in symptoms of insomnia , according to a just-published review of 37 studies with almost 600,000 participants. This same research also found that unhealthy diets—high in simple carbohydrates and processed foods —are associated with an increase in insomnia symptoms, says Frank Scheer, a professor at Harvard Medical School, who studies the internal body clock.

When we eat affects our internal body clock, or circadian system, which regulates our physiology and behaviour, including sleep. While our master clock resides in our brain, each of our organs has its own clock, too. We don’t want to wake up our stomach just when we’re trying to go to sleep.

“There’s a rhythm to our digestive system,” says Kelly Baron, director of the behavioural sleep medicine program at the University of Utah. “And eating at the wrong time can cause internal jet lag.”

Roughly a third of American adults don’t get the recommended seven to nine hours of sleep, according to the Centers for Disease Control and Prevention.

When Sarah Linderman, 46, started having sleep problems several years ago—tossing and turning for hours before drifting off, then popping awake for good at 3 am — a doctor suggested she focus on her diet.

The doctor recommended she consume more of her calories earlier in the day, load up on protein and veggies, cut back on cocktails at night and finish her last meal at least three hours before bedtime. Linderman soon found herself falling asleep more easily. She also began sleeping seven or eight hours uninterrupted and waking feeling refreshed in the morning.

“With the right nutrition, I took my sleep back,” says Linderman, who owns a marketing company in San Pedro, Calif.

What’s the best way to adjust your diet to improve your sleep? Here’s some advice, according to a growing body of research.

Follow a Mediterranean diet

A diet high in vegetables, fruits, whole grains, fish and unprocessed lean meat is good for nutrition and may promote sleep by reducing inflammation and providing nutrients that boost the neurotransmitter serotonin and the hormone melatonin. It also balances our gut microbiome , which may help regulate our circadian rhythm, says Uma Naidoo, a nutritional psychiatrist and director of nutritional, lifestyle and metabolic psychiatry at Boston’s Massachusetts General Hospital.

Some nutrients are particularly helpful.

Tryptophan is an amino acid necessary to produce melatonin. Our bodies can’t produce tryptophan, but foods that provide it include turkey, chickpeas, milk, grains, nuts and seeds.

Serotonin is also a precursor to melatonin. Fruits, vegetables and nuts can help boost serotonin.

Melatonin promotes sleep and influences the timing of the circadian system. Eggs, fatty fish such as salmon, mushrooms, bananas and tart cherries help promote it.

Naidoo’s perfect sleep-promoting dinner suggestion? A mushroom omelet with a side salad topped with flaxseed and walnuts.

Have an early dinner

People who eat close to bedtime have poorer sleep quality, studies show.

Researchers think this may have something to do, in part, with body temperature. Our body typically cools down before bed; this is an important part of our circadian rhythm. Digestion heats our body up, messing with this process.

“Your stomach is working up a sweat just as you’re trying to wind down,” says Marie-Pierre St-Onge, director of the Center of Excellence for Sleep and Circadian Research at Columbia University.

Eating before bed can also cause acid reflux, which often disrupts sleep.

A good rule of thumb, researchers say: Eat dinner at least two to three hours before bedtime to give yourself time to digest your meal.

Be consistent about meal times

Having a regular eating rhythm sends a strong signal to your brain about when it is time to be alert and when it is time to be drowsy, says the University of Utah’s Baron.

Try to eat your first meal and your last meal around the same time each day. “This bookends your day and helps differentiate between waking activities and nighttime,” Baron says.

Eat breakfast

When we don’t eat breakfast, we tend to get hungrier at night. And that sets us up for making poorer food choices closer to bedtime, says St-Onge.

Some studies have shown that people who skip breakfast have lower sleep quality. Researchers aren’t sure why, but they believe it’s because people who eat breakfast tend to practice other healthy habits, such as being more active.

Cut back on alcohol

Yes, alcohol may help you wind down at night and fall asleep faster. But it also messes with your sleep quality . (Do I really need to tell you this?) It suppresses REM sleep, causes sleep disturbances and shortens sleep duration, says Massachusetts General’s Naidoo.

A light evening snack is OK

Hunger is stimulating because the hormones that make you seek food are the same ones that arouse you from sleep, says Columbia’s St-Onge. It’s hard to fall asleep when you’re obsessing about the ice cream in your freezer.

If you eat a snack, make it light and have it at least an hour or so before bed. Pair protein and healthy carbohydrates—hummus and pita or fruit and yogurt—for the biggest sleep boost. Protein is satiating and carbohydrates promote sleepiness by helping the absorption of tryptophan.

And, yes, milk can help, too. A study of people recovering from a cardiovascular event showed that they slept better if they drank milk with honey before bed. And, in general, people who consume more milk throughout the day have better sleep, research shows. Milk is a good source of tryptophan, St-Onge says.

So go ahead and listen to your mum. Have that glass of milk.