Sell a house? No, thanks!

When It’s Easy to Be a Landlord, No One Wants to Sell

Locked in at historically low interest rates. Platforms that make managing rentals a breeze. Homeowners have little incentive to put a house on the market.
Ben Casselman

By Conor Dougherty and Ben Casselman, The New York Times, Feb. 11, 2023

Anyone who already owns a piece of real estate has very little reason to sell it right now. Homeowners can charge high rent, their locked-in borrowing costs are low and equivalent properties are hard to find. Even people who need to move — whether to find more space or to relocate for a job — don’t necessarily have to sell: The strong rental market means they can hold out if they don’t get the price they want, and it’s hard to imagine that changing until there’s enough housing to satisfy demand…

But there are also factors that are specific to this unusual economic moment that limit the number of homes for sale. One is the role of investors, who swooped in to buy homes in the wake of the last housing downturn and now own a significant share of single-family homes, especially in Sun Belt cities like Atlanta and Phoenix — and who have little incentive to sell into a falling market. An even bigger factor is interest rates: Anyone who bought or refinanced a home in the decade from 2011 to 2021 did so in an environment of historically low interest rates, sometimes below 3 percent. Because most homes in this country are bought using 30-year, fixed-rate mortgages, those rates are locked in for decades…

Mynd is an investment management company that pitches itself as a way for investors to buy and operate rental properties without having to deal with finding tenants or handling repairs…[end quote]

Property management firms take a cut of the rent but make it easier for homeowners to become landlords. A homeowner with a low mortgage rate can be better off renting out their old house when they move.

With fewer homes available and higher mortgage rates, many people are locked into renting. The housing price bubble has started to decline but not significantly.



There would be more homes on the market if the tax law allowed long term investors to enjoy the capital gains exclusion like primary homeowners do. A friend of mine has 13 rentals that she has been slowly 1031 exchanging into newer and lower maintenance properties, but if she could get a break on the capital gains tax she would owe, she would gladly lower the number of rentals she owns. Or tax law could change to make real estate investing less tax advantageous and profitable, triggering sales to alternative investments. Local communities could raise the tax rate for non-owner occupied homes. WV already does this.

Yes, there are many reasons to keep a property and rent it out, yet we just sold one last year. I did a survey of landlords in my area, trying to find a good property manager. No such luck and we decided to sell our rental which was still in the capital gains exclusion time frame. I thought about continuing to rent it out but felt we were very well compensated to sell and the aging house meant higher risk for big problems in the near future. A month after closing on the sale of the house, it was hit by a neighbor’s tree that collapsed on the roof in a severe thunderstorm. 2 weeks after that, the sewer backed up from 3 years of long hair and grease down the drain from the tenants. Meanwhile, the profits from the sale of the house was used to buy BRK.B, up 17% since that time, and we are focused on getting another property ready to sell, which has to wait until next year so that we can qualify for the capital gains exclusion again. We have a 2% mortgage that I will be happy to relinquish, as that will leave us with one lock and go capable house that will let us take off traveling.

Real estate is great for the accumulation years, but less so when you want freedom from work and worry.



The state of Connecticut is very concerned about this from all angles. We need workers. Unless we create housing for all levels of our society the workers will be pushed out of the state. The politicos are very open about the need for the housing. The biggest problem is the local governments can not get the support for less expensive housing.

Funny. Not in CT but our property taxes here have gone up about 10%/year over the past 5 years. City has a huge surplus of unspent tax money, yet we just received another 10% increase for 2023. Keeping property taxes low certainly would help with affordability.


That is not how taxes work. It is very counter intuitive. The collective wallet falls in to things that are less expensive when a tax is removed raising in this case raising housing prices. That is inflation. Where taxes are higher less is affordable keeping prices down. The collective wallet goes elsewhere.

In a town if the properties are to be seen as on a ladder by cost you want the more expensive properties taxed more to keep prices down for the less expensive properties on the ladder. All boats rise together. But the more expensive boats rises more.

I get you want lower taxes. I get you want higher property values. That is what is the problem in CT as far as the local governments are concerned. It is a dynamic anywhere.

Everything is expensive here because of constraints to increased inventory and very high demand that is only getting worse. Those in the higher value homes can afford their taxes and typically don’t complain, but the long term residents who are less well off, are forced to sell. We have people moving down from NJ that laugh at our taxes and home prices, causing bidding wars with multiple offers 6 figures over ask. It’s a glorious place to be a seller.

Our city council talks about the need for affordable housing out of one side of the face while announcing increased taxes out of the other. Given there are so many SFH as rentals here, they could easily increase the tax rate on rentals and put that towards affordable housing.


Why would the town split the taxes into rentals v home owner residence?

Are you on the shore?

I have not heard of that before. Has any town ever done that? There are state sales taxes on rentals here. I think.

well looked that up…different than I thought

What is the sales tax on rentals in CT?

The tax rate is 15% (11% for bed and breakfast establishments) of the total payment received for occupancy of the room or rooms for up to 30 consecutive calendar days.

The state of WV did that on anything other than primary residences, at least when we were looking at second homes. We had to always assume that the taxes we would pay would be double what was on the MLS. And in many places there are restrictions on short term rentals based on if you live in the house or not. In our city, if you AirBnB your house, it has to be owner occupied to be legal and get the required permits. Many get around that with 30 day plus furnished rentals, which is considered residential rental and not transient, subject to additional taxes and regulations.

One of the big impacts on affordability is the number of rentals reducing the pool of housing available for purchase. A 2022 study showed that only 41.3% of residences are owner occupied in our city. The high rents that can be obtained here make it very profitable for large investors to buy up inventory to rent it out. Higher tax rates on non-owner occupied, or perhaps for those with more than X units to allow for Mom and Pop rentals vs corporate, could help to make rentals less profitable, and provide more inventory for people to buy, while not dinging owner occupied with excessive taxes which also push affordability away. We are space constricted for new construction.



When my aunt decided she was too old (85) to keep living at her house at the lake, I suggested she hire a management company to offer it as a rental…my ulterior motive being, when I retired, I could boot out the renters and move in myself. She wasn’t interested. Just wanted to sell and walk away. The new owners, who paid, iirc some $425,000, immediately tore the house down, so they could build something bigger and fancier.


Every state that has the concept of “homestead” does that. For example, my property taxes are ~$5k … the identical house across the street, a rental, has taxes of $16k. That’s because my house has been homesteaded for decades and the property tax can only go up by about 2% a year. The rental, by definition, isn’t homesteaded, and goes up roughly by appraised value each year.


Sure. I own a vacation rental property in Hawaii. I pay state transient accommodation tax (TAT) and general excise tax (GAT) that non rental property owners don’t have to pay.

Yeah I looked it up. I had seen the state rental tax option for my business but not used it before.

It is not a local property tax.

Right now we are helping our niece try to find a place to buy for college. Currently she is living in the dorms, but only freshmen are guaranteed a dorm, after that it is a lottery system. The University is woefully behind on dorm development. But then again, housing in general around here has gone crazy the past few years. More and more people moving in.

Long story short, not too many places up for sale because people are turning them into rentals. That may be the route she winds up going.

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