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As ResiClub covered earlier this year, "accidental landlords" are rising in housing markets where sellers have lost pricing power.
Indeed, as you can see in the scatter plot analysis ResiClub created in March 2026, there’s a fairly strong negative relationship (R² = 0.58) between a metro’s home price shift since its 2022 peak and the share of accidental landlords. Put simply: Markets experiencing larger home price corrections are more likely to see sellers pivot to renting after failing to sell. In those markets, some homeowners may decide to rent their property rather than accept what they view as too big of a price cut.
Some homeowners who fail to get the price they’re hoping for simply pivot their strategy: instead of accepting too low of an offer, they convert the property into a rental listing. These owners are often referred to as “accidental landlords.”
Click here to view an interactive version of the chart below
Apart from the obvious consideration—whether the homeowner is really ready to assume the responsibility of being a landlord—there's another financial consideration that can get overlooked by accidental landlords until it's too late: capital gains taxes.
Under current law, single filers can exclude up to $250,000 of gains, and married couples filing jointly can exclude up to $500,000 of gains, on the sale of a home that served as their primary residence—provided they owned and lived in the home for at least 2 of the past 5 years before the sale.*
That means someone who moves out and rents their home may still qualify for that exclusion if they sell within roughly 3 years of moving out (since the 2-of-5-year use test looks back from the sale date). Wait longer than that and the use test generally expires. To once again qualify for the full exclusion, the owner would generally need to move back into the home and accumulate at least 24 months of use as a principal residence (not necessarily consecutive) within the 5 years before the sale
Even for owners who sell within that 3-year window and still qualify for the full Section 121 exclusion, there's another tax issue that's easy to overlook: depreciation recapture. Once a home is converted into a rental, the IRS generally treats depreciation as having been allowed (or allowable) during the rental period. Upon sale, the portion of the gain attributable to that depreciation generally cannot be excluded under Section 121. Instead, it's taxed separately as unrecaptured Section 1250 gain, at a maximum federal rate of 25%—even if the rest of the gain qualifies for the home-sale exclusion. For some accidental landlords, this ends up being the bigger surprise, since most sell within the Section 121 exclusion window rather than waiting long enough to lose the exclusion.*
When running the numbers on whether keeping the property as an accidental rental makes sense, it's worth factoring in the capital gains math (and discussing it with a tax/legal expert).
This is for informational purposes only and does not constitute tax, legal, or financial advice
Among the 50 largest metro area housing markets, these markets have the highest—and lowest—share of accidental landlord listings right now:
Major metros with the highest share of “accidental landlord” rental listings:
Denver, CO —> 4.9%
Houston, TX —> 4.2%
Austin, TX —> 4.1%
San Antonio, TX —> 3.9%
Portland, OR —> 3.7%
Major metros with the lowest share of “accidental landlord” rental listings:
Boston, MA —> 0.6%
Providence, RI —> 0.6%
New York, NY —> 0.7%
Hartford, CT —> 0.7%
Buffalo, NY —> 0.8%
Click here to view an interactive version of the map below
As ResiClub covered earlier this year, "accidental landlords" are rising the most in housing markets where active inventory for sale has bounced back the fastest to pre-pandemic 2019 levels.
Indeed, ResiClub’s March 2026 analysis finds a strong positive relationship (R² = 0.65) between: the share of accidental landlords in a metro and how much active inventory in February 2026 exceeds February 2019 levels. In other words, markets where for-sale housing inventory has rebounded the most are also the places where more sellers failed to sell and instead converted their homes into rentals. That makes intuitive sense: when listings rise, sellers face more competition, which increases the likelihood that some listings fail to transact.
Click here to view an interactive version of the chart below
*Please note today’s ResiClub article above is for informational purposes only and does not constitute tax, legal, or financial advice. Capital gains exclusion rules, depreciation recapture calculations, and the applicable tax rates depend on each owner's specific circumstances. Readers should consult a qualified tax professional before making decisions about renting, selling, or holding a property.
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