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

U.S. home sellers increasingly opt to hold on to their houses amid a soaring home-rental market

By Nicole Friedman and Will Parker
Tue, Sep 20, 2022 8:27amGrey Clock 3 min

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.



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Should AI Have Access to Your Medical Records? What if It Can Save Many Lives?

We asked readers: Is it worth giving up some potential privacy if the public benefit could be great? Here’s what they said.

By DEMETRIA GALLEGOS
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We’re constantly told that one of the potentially biggest benefits of artificial intelligence is in the area of health. By collecting large amounts of data, AI can create all sorts of drugs for diseases that have been resistant to treatment.

But the price of that could be that we have to share more of our medical information. After all, researchers can’t collect large amounts of data if people aren’t willing to part with that data.

We wanted to see where our readers stand on the balance of privacy versus public-health gains as part of our series on ethical dilemmas created by the advent of AI.

Here are the questions we posed…

AI may be able to discover new medical treatments if it can scan large volumes of health records. Should our personal health records be made available for this purpose, if it has the potential to improve or save millions of lives? How would we guard privacy in that case?

…and some of the answers we received. undefined

Rely on nonpartisan overseers

While my own recent experience with a data breach highlights the importance of robust data security, I recognise the potential for AI to revolutionise healthcare. To ensure privacy, I would be more comfortable if an independent, nonpartisan body—overseen by medical professionals, data-security experts, and citizen representatives—managed a secure database.

Anonymity cuts both ways

Yes. Simply sanitise the health records of any identifying information, which is quite doable. Although there is an argument to be made that AI may discover something that an individual needs or wants to know.

Executive-level oversight

I think we can make AI scanning of health records available with strict privacy controls. Create an AI-CEO position at medical facilities with extreme vetting of that individual before hiring them.

Well worth it

This actually sounds like a very GOOD use of AI. There are several methods for anonymising data which would allow for studies over massive cross-sections of the population without compromising individuals’ privacy. The AI would just be doing the same things meta-studies do now, only faster and maybe better.

Human touch

My concern is that the next generations of doctors will rely more heavily, maybe exclusively, on AI and lose the ability or even the desire to respect the art of medicine which demands one-on-one interaction with a patient for discussion and examination (already a dying skill).

Postmortem

People should be able to sign over rights to their complete “anonymised” health record upon death just as they can sign over rights to their organs. Waiting for death for such access does temporarily slow down the pace of such research, but ultimately will make the research better. Data sets will be more complete, too. Before signing over such rights, however, a person would have to be fully informed on how their relatives’ privacy may also be affected.

Pay me or make it free for all

As long as this is open-source and free, they can use my records. I have a problem with people using my data to make a profit without compensation.

Privacy above all

As a free society, we value freedoms and privacy, often over greater utilitarian benefits that could come. AI does not get any greater right to infringe on that liberty than anything else does.

Opt-in only

You should be able to opt in and choose a plan that protects your privacy.

Privacy doesn’t exist anyway

If it is decided to extend human lives indefinitely, then by all means, scan all health records. As for privacy, there is no such thing. All databases, once established, will eventually, if not immediately, be accessed or hacked by both the good and bad guys.

The data’s already out there

I think it should be made available. We already sign our rights for information over to large insurance companies. Making health records in the aggregate available for helping AI spot potential ways to improve medical care makes sense to me.

Overarching benefit

Of course they should be made available. Privacy is no serious concern when the benefits are so huge for so many.

Compensation for breakthroughs

We should be given the choice to release our records and compensated if our particular genome creates a pathway to treatment and medications.

Too risky

I like the idea of improving healthcare by accessing health records. However, as great as that potential is, the risks outweigh it. Access to the information would not be controlled. Too many would see personal opportunity in it for personal gain.

Nothing personal

The personal info should never be available to anyone who is not specifically authorised by the patient to have it. Medical information can be used to deny people employment or licenses!

No guarantee, but go ahead

This should be allowed on an anonymous basis, without question. But how to provide that anonymity?

Anonymously isolating the information is probably easy, but that information probably contains enough information to identify you if someone had access to the data and was strongly motivated. So the answer lies in restricting access to the raw data to trusted individuals.

Take my records, please

As a person with multiple medical conditions taking 28 medications a day, I highly endorse the use of my records. It is an area where I have found AI particularly valuable. With no medical educational background, I find it very helpful when AI describes in layman’s terms both my conditions and medications. In one instance, while interpreting a CT scan, AI noted a growth on my kidney that looked suspiciously like cancer and had not been disclosed to me by any of the four doctors examining the chart.

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