What an uptick in home rentals means for proptechs

A growing proportion of homeowners are pulling their for-sale homes from the market to rent them instead. The number of delisted homes that never went under contract increased by 58% over the past year.

Why should we care?
Though rising mortgage interest rates have tampered demand for home purchases, these shifting conditions appear to be a boon for alternative home-lending proptechs as well as rental-management firms. With fewer homeowners income from a home sale to make a down payment on a new house, proptechs that help homeowners buy before they sell should expect an uptick in demand. “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, CEO of Knox Financial. “We certainly expect people to decouple when they buy from when they sell, and part of the way to do that is to rent.” More housing stock for rent could also fuel growth in the rental-management space, and it may also bring rental prices down if rental supply increases at a rate higher than that for rental demand, which itself has increased 13.4% of the past year. This could help temper inflation, at least in the medium run, before eventually lowered interest rates encourage homeowners to sell.