Landlords affiliated with institutions encounter unprecedented opposition from an unconventional rival
In a surprising turn of events, the housing market slowdown has led to a surge of accidental landlords in major metropolitan areas with previously high home prices. This trend, particularly pronounced in cities like Austin, is causing a significant increase in rental inventory and softer rental pricing trends, as landlords compete in a more tenant-friendly market.
According to a report by Parcl Labs, the largest single-family rental Real Estate Investment Trusts (REITs) are selling more homes than they're buying. This shift is due to homeowners who intended to sell but are now renting out their properties due to housing market challenges. In Austin, for instance, homeowners who purchased at market peaks, such as in 2021–22, are unable to sell without incurring losses and are opting to lease instead, waiting for market conditions to improve.
The rise of accidental landlords, combined with the activity of institutional investors, is especially visible in major cities with high demand and previously heated housing markets. Cities like Austin and other high-demand urban centers have experienced rental inventory increases exceeding 20% over the past year, primarily due to former owner-occupied homes shifting into the rental market.
The influx of these new rental units has exerted downward pressure on rental prices in some markets. In Austin, single-family home rents have declined by approximately 1.8%-2% in recent months, reflecting more supply relative to demand. Nationally, rental markets are shifting towards a tenant’s market, where longer vacancy periods and increased renter selectivity are observed, resulting in slower leasing and softer rent growth.
However, not all markets are seeing rent decreases. Some still see modest rent increases, such as a median asking rent nationwide rising by around 1.5% as of June 2025. Landlords are prioritizing maintaining occupancy over raising rents sharply in these markets.
The rise of accidental landlords adds a new dimension to the rental market, injecting non-professional landlords into the mix, expanding supply unexpectedly. While individual buy-to-let investors have mixed responses—some growing portfolios and some shrinking them—the overall context tends to cluster in areas hardest hit by market slowdowns or price corrections, leading to regionally variable impacts on rental prices and market conditions.
This dynamic, however, does not necessarily threaten the largest institutional investors, who hold over a third of their assets in six U.S. housing markets: Atlanta, Phoenix, Dallas, Houston, Tampa, Florida, and Charlotte, North Carolina. According to Rick Sharga, CEO of CJ Patrick Co., this limits the threat from accidental landlords.
As the housing market continues to evolve, the largest single-family rental REITs are deploying more funds into build-to-rent projects instead of competing with smaller investors and traditional homebuyers for resale properties. Some frustrated sellers are deciding to de-list their properties and offer them on the rental market, further increasing supply.
The inventory of homes for sale has been growing steadily over the past year, especially in pandemic migration markets like the Sun Belt. Rising supply, high mortgage rates, and waning consumer confidence are causing potential home buyers to stay on the sidelines, contributing to the rise of accidental landlords.
A study by Parcl Labs refers to the new sellers turning to rental as 'accidental landlords'. These sellers, like Garret Johnson, a homeowner in Dallas, are unable to sell due to a lack of buyers and are deciding to put their homes up for rent. Johnson recast his loan and put more equity in the home to lower the payments, ensuring that his rent doesn't fully cover his mortgage. Johnson doesn't expect to sell for several years and hopes to start turning a profit on the rent versus mortgage in the next few years.
In summary, the housing market slowdown has caused a geographical concentration of accidental landlords in major metro areas with previously high home prices, resulting in increased rental inventory and generally softer rental pricing trends as landlords compete in a more tenant-friendly market. This trend is expected to continue, potentially limiting rental growth upside for next year.
- The housing market slowdown has resulted in a surge of accidental landlords, particularly in cities like Austin, selling more homes than they're buying.
- These accidental landlords, combined with institutional investors, are causing increased rental inventory, leading to slower leasing and softer rent growth in some markets.
- In Austin, for instance, homeowners who purchased at market peaks are unable to sell without incurring losses and are opting to lease instead, waiting for market conditions to improve.
- The influx of accidental landlords has added a new dimension to the rental market, injecting non-professional landlords into the mix, expanding supply unexpectedly.
- The largest single-family rental REITs are deploying more funds into build-to-rent projects instead of competing with smaller investors for resale properties.
- Some frustrated sellers are deciding to de-list their properties and offer them on the rental market, further increasing supply.
- Garret Johnson, a homeowner in Dallas, is an example of an accidental landlord who recast his loan and put more equity in the home to lower the payments, ensuring that his rent doesn't fully cover his mortgage.
- The housing market slowdown is expected to continue, potentially limiting rental growth upside for next year.
