Houston Leads U.S. in Accidental Landlords as Listings Surge

Houston now leads the nation in accidental landlords, owners who lease their homes after failing to sell them, according to the Houston Chronicle, citing Zillow data.

An estimated 4.3% of single-family rental listings in Houston are homes that owners gave up on selling in the previous three months. That is triple the rate of three years ago, more than double the 2.0% national share, and ahead of Denver, Austin and San Antonio.

Listings Pile Up and Sellers Pivot

Zillow senior economist Kara Ng says the 4.3% likely undercounts the trend. Some owners who were discouraged by the softer market skip selling and list straight into a rental.

Markets with more accidental landlords tend to have more for-sale homes with price reductions, longer days on market and less competition among buyers, Ng said. In Houston, the number of single-family homes for sale hit a record this summer, per the Houston Association of Realtors.

Rental Supply Jumps 80%

Houston’s supply of single-family homes, townhomes and condos available for lease rose 80% over three years to about 16,660 listings in September, per John Burns Research. That count excludes build-to-rent homes.

Leasing takes longer as a result. During the pandemic, a single-family home leased in under a month, said Kevin Macicek, a broker with property management firm Area Realty. Now it can take up to 60 days.

Single-family rents in Houston average $2,054, roughly flat from a year ago, per John Burns. Rent growth began slowing in 2023 after spiking during the pandemic.

Competing With Build-to-Rent

Accidental landlords also compete with build-to-rent homes, which investors build specifically for lease. Houston has 16,225 of them, up from 2,931 less than a decade ago, per John Burns. CRE Daily has tracked how build-to-rent supply is building in other metros as well.

Inner-loop neighborhoods are especially crowded. John Burns vice president Jessica Newhouse recently found 20 townhome rentals at similar prices within a quarter mile of each other in the East End. When so much of the same product lists at once, she said, pricing power gets thin.

Why Sellers Convert to Rentals

Sellers near new-construction neighborhoods struggle to compete with builders offering incentives and discounted mortgage rates, said Paige Martin of Houston Properties Team. Leasing lets them wait out the market.

Owners who bought after rates began rising in mid-2022 face a second problem: values that have not risen enough to cover the cost of moving. One Spring agent said a client would have owed his lender about $15,000 to $20,000 at closing, so he leased instead.

A Katy seller who cut her price by $30,000 over more than six months leased the home to a relative for $2,000 a month. She expects to roughly break even after taxes, utilities, maintenance and HOA fees.

Thin Margins for New Landlords

Realvest president Taylor Laurence tells clients that breaking even counts as doing well in this market. Rents often do not cover all expenses, and repairs that owners deferred become unavoidable once a tenant moves in.

Some agents now market homes for lease and sale at the same time. One Cottage Grove owner cut her asking price from about $810,000 to $769,000 and expects to market the home for lease soon, with monthly carrying costs near $4,900.

Why It Matters

For single-family rental investors and build-to-rent developers, accidental landlords add supply that holds down rents in the metro. CRE Daily has also reported how single-family rent growth splits by price tier.

Martin warned that holding for a better market is not a guarantee. An owner who waits a year could return to the same frustration.

What’s Next

Watch whether listings and days on market ease. Many accidental landlords are betting they can hold on until conditions improve, and the record supply of for-sale homes will decide whether that bet pays off.