- Americans are renting more than ever.
- This is primarily due to landlords being able to provide renters with cheaper prices thanks to access to a lower cost of capital and lower cost of insurance.
- Renting has multiple economic and lifestyle-related benefits that millennials and Gen-Z find value in.
“I feel like I’m throwing money away.”
As a homeowner, you have probably heard a decent amount of renters state that their money is getting flushed down the toilet. The worst part is: that toilet does not belong to them. Through the years, Americans cataloged renting as a short-term alternative to buying. A you rent until you can buy mentality. So if renting is not a good money move, then why are 36% of American homes rented?
On top, 65% of renters are young adults while 64% of millennials who did choose to purchase a home ended up regretting it. Today, younger generations amount for the majority of renters, while almost 80% of senior citizens own the place they live in.
According to statistics, Americans are renting more than ever. Two of the main reasons for this include affordability issues and flexibility. Most millennials, approximately 55%, could not afford a house in their city if they wanted to. However, many of them are satisfied with the freedom renting provides. This trend is parallel to the rise of remote work, since short-term lease agreements allow millennials and Gen-Z to move constantly.
Yet, when the time comes to settle down, should these demographics still consider renting over buying?
Renting as a Money Move
“When buying you are building wealth!!! Renting is like burning money!” – Your uncle, probably.
Similar to homeownership, renting has its share of benefits that renters experience instantly:
- No Homeownership Costs: Stove broke down? The landlord will take care of that. Repair bills and maintenance expenses will add up as the property and appliances decay. Renters waive 100% of those expenses.
- No Down Payments: 15K on day one? Forget about that. However, most rental properties will require a security deposit. This charge assures that the property will be taken care of and is reimbursed to the renter after the lease period.
Additional benefits that renters might notice as time goes on include:
- No Property Taxes: Homeownership taxes amount to thousands of dollars a year, and are waived for renters.
- Lower Insurance Costs: Renters’ insurance is, on average, $1000 cheaper versus homeowners insurance.
- Lower Utility Costs: Properties are usually larger than rental apartments and homes, which means more effort for heating and cooling. Additionally, rental properties occasionally include costs for water and electricity (if you are lucky).
Apart from these benefits, there is no stress regarding devaluation. Plus, the flexibility to move elsewhere is exceptional.
What does today’s market say about buying or renting?
“Despite widespread home price declines, renting still makes more sense than owning in the vast majority of U.S. housing markets, according to researchers at Florida Atlantic University and Florida International University.”
The article quoted above went deep into 99 United States housing markets and concluded that houses still sell for more than they are worth in 97 of the 99 markets. This study suggests that renting is currently more favorable than buying a property.
When you calculate the higher mortgage costs, the increase in insurance, and the costs to maintain a property, renting can be cheaper than owning.
If you are a part of the 64% of millennials who regret buying a property (or are simply tired of the expenses of homeownership), you could make a big buck by selling it and renting it back. Get your money back here.
Additional market trends include high interest rates and an incredibly low supply of properties. These factors also points at high property prices for the present and near future. Homeowners, it might be your time to swing over to renting. Click here to learn how without moving out.