These Homeowners Decided to Rent Again

Some homeowners looked at rising home prices and decided to get out while the going was still good. Now theyre renters again.

As a general rule, its a bad idea to try to time a market, and housing is no exception. But some homeowners whove been sitting on the sidelines watching their home values soar have decided that now is the time to cash out before a downward slide takes hold.

Rather than swap their old home for a new one, theyre putting their newly minted nest eggs in the bank and renting apartments until, they hope, the market cools and they can buy again once home prices come back down to Earth.

The choice is a risky one. No one can predict what the future holds, especially as interest rates soar and the economy wavers.

On paper it sounds OK, said Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers and Consultants. But every step is fraught with a lot of unknowns.

Mr. Miller laid out a host of scenarios that could make such a move foolish. What if a homeowner sells their house at what they think is the peak of the market, but prices are actually higher by the time theyre ready to buy again and now the money theyve banked doesnt go as far? Or what if rents continue to climb, eating into whatever savings theyve accumulated?

What youre risking is essentially investing in a rental for a period of time until the market does what you hope it will. That seems fraught with problems, Mr. Miller said.

But if these homeowners bet right, and home prices drop significantly, they could see their money go much further than it does right now when or if they end up shopping in a buyers market. A small, but sizable, cohort of homeowners are taking their chances, accounting for 19 percent of sellers in 2021, up from 15 percent in 2019, according to Zillow.