The Single-Family Shift: When Owners Become Renters

Dennis Lee
Oct 14
3 min read

As mortgage rates stay stubbornly high, a new kind of landlord is emerging across the U.S. — not out of strategy, but necessity.

According to recent analysis by Realtor.com and Parcl Labs, many single-family homeowners are shifting from selling to renting amid rising mortgage rates, economic uncertainty, and a slower buyer market. Unable to fetch their desired prices, more owners are choosing to rent out their homes rather than sell at a discount.

In Dallas, for example, sellers are facing nearly 40% more competition than last year, prompting many to lower prices or convert their listings into rentals. However, most new landlords still find that rental income does not fully cover their mortgage payments, yet they prefer to wait out the market rather than sell at a loss.

To better understand how this “owner-to-renter” dynamic is unfolding, Market Stadium analyzed the top and bottom 30 metros (60 total) across the U.S., comparing recent changes in mortgage delinquency growth (30–89 days past due) and single-family rent growth over the past six months. The goal was to see where rent performance and mortgage stress are moving in tandem—or diverging.

The scatter plot below maps these metros across two dimensions: mortgage delinquency growth (x-axis) and rent growth (y-axis). Each city falls into one of four quadrants (Q1–Q4), illustrating its relative position to the six-month average for each metric.

🔵 Q1 — Rising Rents, Rising Delinquencies

(High Rent Growth, High Mortgage Stress)

This quadrant represents metros where both rent prices and mortgage delinquencies are climbing — suggesting landlords might still be finding demand but are facing higher financial pressure.

Examples: Jefferson City (MO), Muskegon (MI), Binghamton (NY), Evansville (IN-KY), Omaha (NE-IA)
Interpretation: These markets show mixed signals — strong rent performance but increasing mortgage strain. Likely areas with solid rental demand but tightening affordability and credit conditions.

🟢 Q2 — Rent Growth Without Mortgage Stress

(High Rent Growth, Low Delinquencies)

Metros here show healthy rent gains while keeping mortgage delinquencies relatively contained.

Examples: Milwaukee (WI), Hickory (NC), Fayetteville (NC), Seattle (WA), Tallahassee (FL)
Interpretation: These areas appear more resilient — steady rental demand, relatively stable owner finances. This group includes several college towns and mid-sized metros where demand is less volatile.

🔴 Q3 — Weak Rents, Improving Credit Conditions

(Low Rent Growth, Low Delinquencies)

Markets in this group are experiencing cooling or negative rent growth but without notable increases in delinquency.

Examples: Tampa (FL), Boulder (CO), Athens (GA), Spartanburg (SC), Chattanooga (TN-GA)
Interpretation: Rent softness may reflect supply catch-up or normalized demand, not financial stress. These metros could be stabilizing after sharp post-pandemic rent surges.

⚫ Q4 — Weak Rents, Rising Delinquencies

(Low Rent Growth, High Mortgage Stress)

This is the most concerning quadrant — falling or flat rents alongside increasing mortgage delinquency rates.

Examples: Barnstable Town (MA), Terre Haute (IN), Tyler (TX), Des Moines (IA), Boston (MA-NH)
Interpretation: Signals pressure among owners in cooling rental markets. Investors and owners may face negative cash flows as rent stagnates while debt service remains elevated.

Overall Takeaway

Diverging patterns: While some metros maintain rent resilience (Q1/Q2), a growing cluster (Q4) faces both rental slowdown and mortgage stress.
Investor implication: Watch Q4 markets for early signs of forced rental conversions or distressed listings — these could emerge as next-wave rental supply or discounted acquisition opportunities.
Balanced areas (Q2) remain the strongest performers under current rate conditions — stable rent income and manageable mortgage health.