Are we now living in a Landlord Nation? If you look at who owns rental property in America, you might think that more people are renting than are owners, although that isn’t the case. 


In addition to our primary residence, we own one and a half rental properties. That is, we own one by ourselves and half of another, more expensive condo that we rent out in a college town.

We’ve owned the more expensive condo for nearly 10 years and decided that this Spring would be a good time to sell it. We wouldn’t make that much money when we sold, if anything, but given that we bought off the plans at the height of the market, we thought we’d get all of our money out.

So we listed the condo to sell and got an immediate offer (which thrilled us), which then fell apart (which was enormously disappointing). But the agent told us that there was another offer coming, to rent the condo for two years. With no other offers forthcoming, that’s the deal we ultimately took, and it’s at a high rental amount our agent didn’t think we’d get.

“Landlord nation.” That’s how Glenn Kelman, CEO of Redfin, recently described the current real estate market to CNBC’s Diana Olick. He told her that inventory is dropping dramatically (Redfin reported that the number of homes for sale fell 13.3 percent, the steepest decline in four years, marking 19 straight months of annual declines), and that home builders are putting up rental apartment buildings rather than single-family homes Millennials and other first-time buyers could afford.

He told her empty-nesters are enjoying living in their big homes with 30-year mortgages locked at or near historic lows and aren’t selling. That for the first time, the real estate industry is feeling the pinch and his own company is going to have its growth constrained by the lack of housing inventory. If nothing gets listed, real estate agents have nothing to sell.

We are continuing to experience the aftermath of the worst economic recession since the Great Depression in unexpected and unintended ways. When the real estate bubble burst, millions of homeowners were underwater with their mortgages and went into foreclosure or did deeds-in-lieu of foreclosure, sold their homes in short sales, or got stuck in homes they couldn’t unload. Investors with cash stepped in. Hedge funds bought thousands of homes and rented them back to the current owners. Smaller investors picked up dozens of homes for pennies on the dollar. Homeowners who were flush, who always wanted that bigger lot, picked off their neighbor’s homes for a fraction of what they were worth.

(And lest you think the real estate transfer was limited to residential real estate, commercial and industrial deals abounded – and still do in many places. Think about malls where tenants like Sears, J.C. Penney, and other large legacy retailers are struggling.)

Self-taught experts in REO transactions, foreclosures and short sales ruled the markets. And, slowly, the residential real estate market recovered and then boomed. Because not only are mortgage interest rates still near historic lows (despite the Federal Reserve Bank raising interest rates twice), very few homeowners (on a relative basis) are selling.

Millennials, the eldest of whom were in their early 20s when the Great Recession started, and the youngest of whom witnessed the financial stress, and in many cases ruin, of their family first-hand, have been struck by how stuck Americans got. Those that are finally moving out of their parents’ homes are renting with friends or by themselves, realizing that student loan debt, Uber habits, overcharging credit cards, eating lunch and dinner out (and not the consumption of avocado toast), leasing fancy cars, and taking jobs that don’t pay enough to add to savings on top of covering debt payments, have at least postponed – if not sunk – their dreams of homeownership.

“Landlord nation” is an interesting concept. It could imply that people are choosing to rent and not own. It could also imply that they can’t. But in real estate, nothing lasts forever and housing markets can change on a dime.

Trulia is reporting that more than one in 10 for-sale listings had a price cut and most major housing markets saw cuts increase: Sixty-nine of the 100 largest metros saw the share of for-sale listings with a price reduction increase from last year to this year. While that could mean home price increases are flattening. It could also mean sellers, seeing price wars first-hand, are setting pie-in-the-sky prices for their homes, only to reprice them in order to sell.