Accidental landlords could be source of inventory

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“Accidental landlords” could represent a source of inventory, now that rising home prices are bringing many rental properties out of negative equity, a NAR economist thinks.

Many underwater homeowners who decided to rent their old homes out rather than selling at a loss when trading up may jump at the chance to get out of the landlord game, writes Ken Fears, manager of regional economics for the National Association of Realtors.

That may be particularly true of buyers who took advantage of low down payments afforded by FHA loan programs to buy a new primary residence while renting out their old homes. Selling the rental property now would allow them to buy down principal on their new home and eliminate the pricey mortgage insurance premiums on FHA loans, Fears notes. Source: realtor.org.