Side Effect of Strong Rental Market,
Miniscule Interest Rates
For the vast majority of Sellers, threatening to rent if they can’t get their price is a bluff (see, “The Rental Bluff“).
The exception to that?
The owner of an older, dated home, with substantial equity, who doesn’t need the money for another home and isn’t about to risk the sales proceeds in the stock market.
Because their home is already dated, there’s less risk that its condition will be adversely affected by renting it (the next owner is likely to do substantial renovation, anyways).
And, assuming the house has a fair market value of $500k and would rent for $3,000 a month, they’d gross $36,000 annually renting it, before subtracting perhaps $12k -$15k in property taxes, insurance, and management fees.
Net rental income: call it $20k, vs. a measly $5k in interest income from the bank or in a money market fund.
