Alan Johnson never planned on being a landlord.
But there he was, stuck with two options — become a landlord or pay two mortgages, in two different states.
As of May, 31.4 percent of all homeowners with mortgages wouldn't be able to pay them off if they needed to move suddenly. Or in other words, 16 million homeowners across the nation can't sell their house, according to data from Zillow. Though the housing market is turning around, the rocky economy forces some homeowners to quickly move to a different town or state without being able to pay off their mortgages first. Like Johnson, homeowners on the move are turning to a nontraditional method to save on finances.
"We have a lot of 'reluctant landlords,'" said Paul Smith, executive director for the Utah Apartment Association, speaking about Utah's housing market. "They didn't do it on purpose but for some reason they bought a new home or got (job) transferred and they can't get out of their current home what they owe so they choose to rent it."
Johnson became a reluctant landlord when he accepted a job offer in San Francisco, forcing him and his wife to leave behind their home in Herriman.
Though Johnson went through an agent to sell his 2,000-square-foot home, they weren't able to find any takers for the asking price and in the time frame they had in mind.
"It was difficult to compete with all the short-sells going on," Johnson said. "Due to the lack of interest we determined we weren't going to get an offer soon enough to justify leaning on the market another six months or whatever it would take to sell it."
Johnson put his home of four years on the market in August 2011 and took it off in mid-October of that year.
"I couldn't have it on the market for too long; I couldn't be paying for two house payments," he said.
Johnson and his wife are now living in a rented home in California.
As soon as he put his house for up for rent, though, he had more people interested. Johnson was able to rent his house to a couple who moved to Utah from Colorado.
They have been his only tenants so far.
Cases like these have been springing up more often compared to two years ago, said Donna Pozzuoli, president of the Salt Lake Board of Realtors.
This year, when a few of Pozzuoli's customers saw that they could only realistically sell their home for $20,000 to $30,000 less than what they were hoping, they switched to renting.
The housing market is slowly improving, leaving homeowners feeling confident. This year there has been an increase in housing sales and lower vacancy rates.
The dip in foreclosures has also improved the market. Foreclosures are down 24 percent from their peak and vacancy rates are lower, according to Trulia's American Dream Survey, which was released in April.
But despite the improving market, homeowners can become reluctant landlords depending on when they bought their home and at what price, Pozzuoli said.
"Though prices are stabilizing, in some cases they haven't come all the way back around for someone who may have financed the majority of the home and didn't put a lot into it for that equity," she said.
Studies have also shown that more middle- and upper-income families are renting. The states that have the most single-family homes being rented are those with the most foreclosure rates, such as California, Nevada and Arizona, according to the Harvard Research Center.
Some homeowners choose to rent their home because they see it as an investment. Since home value is down, many don't want to take a loss and will wait until the market improves, said Jill Simmons, spokeswoman for Zillow.
"Where we're seeing significant recovery is rental units are being filled faster than people are buying homes," Smith said. "It's less commitment. Everybody knows people who are upside down, so psychologically unless you can commit for five to 10 years it doesn't make sense to buy a home; you should rent."
Johnson is one of those renters who is now cautious before buying.
"I used to always think the best investment you could make is to buy a home, and no matter what you did the value would always climb," Johnson said. "I don't feel that way anymore. I'm hesitant, especially to buy in California where the price is extremely high and there's huge swings in the market. Even a small swing in the market is going to decrease your value significantly. I'm definitely going to be more hesitant about buying."
Despite Johnson's hesitations, he is among the 78 percent of renters who hope to live in a home they own someday. Though many renters hope to be owners, many admit that time won't come anytime soon, according to this year's American Dream Survey that Trulia conducted.
Housing bubbles have created abnormal prices throughout the nation and take awhile for the prices to shift back to normal rates. Currently, the nation is at 37 percent normalcy in the housing market, with zero percent being the peak of the housing bubble, according to the Trulia survey. It is predicted to gain complete normalcy in early 2016.
Johnson plans to continue to rent his house until the housing market improves, although he realizes that repair costs on the home could add up.
"We make enough to clear our mortgage; they're (the renters) essentially paying my mortgage for me," he said. "In the long term if I get good tenants, financially it makes sense."
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