When homes fail to sell and the owners decide to rent, it can impact the local rent supply and lower rental prices due to the increased inventory of rentals available.
Redfin economist Chen Zhao said in a recent Yahoo interview that housing gridlock—driven by high rates and locked-in homeowners—is forcing would-be sellers to rent out properties instead, creating a surge in sellers becoming landlords. “Those homes are adding supply to the rental market,” she said.
New supply from accidental landlords is cooling rent growth
So, this new supply is coming in to the rental market where there may already be new apartment construction that is also adding new rentals. This explains why rents are stabilizing in some areas and even declining.
When homes fail to sell and become rentals that increases rental inventory especially in single-family homes. More supply leads to less upward pressure on rents in some markets leading to flat or slightly declining rents…