A recent survey conducted by Realtor.com and CensusWide sheds light on the preferences of homeowners in today’s market. Out of the 2,000 respondents, a majority of 60% expressed their willingness to consider renting out their current home instead of selling it when they decide to buy or rent elsewhere. The survey, conducted online in July 2023, reveals an interesting trend in the real estate landscape.
The study also found that 23% of homeowners had either already rented out their homes in the past or had plans to do so in the future. Additionally, 16% of respondents expressed their openness to the idea of renting out their homes.
One of the driving factors behind homeowners’ inclination towards renting is the current mortgage rate, which hovers above 7%. With such high rates, many homeowners hesitate to sell their properties. Renting, on the other hand, offers an opportunity to earn extra income and maintain ownership of their homes, providing flexibility for potential moves.
To assist homeowners in exploring their rental prospects, Realtor.com has introduced a new tool that partners with Airbnb. This tool allows users to estimate potential short-term rental income, whether for one room or their entire house. By utilizing Airbnb data from similar listings in the same zip code, homeowners can get an accurate picture of the earnings they could expect from a seven-day rental.
However, recent legislation has introduced some complications for aspiring short-term rental hosts. In cities like New York, new ordinances dictate that hosts must be registered with the city, live in the property they are renting, be present during guests’ stay, and limit occupancy to two guests. These regulations may impact homeowners’ plans to venture into the short-term rental market.
As the real estate landscape continues to evolve, more homeowners find themselves faced with the renting vs. selling dilemma. With various factors at play, it ultimately comes down to individual circumstances and priorities. Whether it’s the desire for extra income or the need for flexibility, renting offers an attractive alternative for homeowners looking to navigate the current market.
The Impact of New Rules on Airbnb Listings in New York City
The introduction of new regulations in New York City is expected to have a significant impact on the availability of Airbnb listings. In an attempt to address this issue, Airbnb filed a lawsuit against the city, claiming that the rules essentially amount to a ban on short-term rentals. However, the case was dismissed by a judge in August.
Under the existing rules, individuals in New York City are prohibited from renting out a room or their entire home for less than 30 days, regardless of whether they reside in the property or own it.
Airbnb has strongly criticized these new rules, describing them as “extreme and oppressive.” The company believes that the regulations are designed to eradicate the short-term rental market in New York City entirely.
According to estimates from Skift, the implementation of these rules could result in a 70% reduction in the total number of Airbnb listings in the city.
This move by New York City is not unique. Other cities, such as San Francisco and Seattle, also have restrictions on the number of properties that individuals can rent out on a short-term basis. In Los Angeles, hosts are only permitted to rent out their primary residence for short-term stays.
Choosing to Rent: Financial Considerations
When it comes to the decision between renting and selling a property, financial considerations play a crucial role. According to homeowners who were surveyed by Realtor.com, factors such as earning extra income and maintaining equity were key drivers for choosing to rent.
21% of respondents said they were interested in earning additional income by having a renter, while 19% preferred to rent in order to preserve the equity they had already built in their home.
Notably, many homeowners had taken advantage of historically low interest rates or refinanced their mortgages at very favorable rates. Renting out their property offered them an opportunity to make money while retaining ownership.
The extra income from renting often had specific purposes for homeowners. A third of respondents stated that they intended to save the extra income in order to purchase another property with a higher mortgage rate. Meanwhile, 29% wanted to be prepared for potential increases in adjustable-rate mortgage payments, and 21% planned to use the rental income to help cover their current mortgage expenses.
These financial motivations demonstrate why renting rather than selling can be an attractive option for many homeowners.