Homeowners Recognize Value of Renting: Avoiding Foreclosure, Fluctuating Market Seen as Perks

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These days, some current homeowners are recognizing the advantages of renting, according to a new survey commissioned by the National Apartment Association.
Given the current state of the real estate market, the independent 2007 survey conducted by Harris Interactive found that the majority of homeowners—65 percent—believe that there are advantages to renting as opposed to owning.
And that number contradicts what many people are used to hearing.
“This survey

These days, some current homeowners are recognizing the advantages of renting, according to a new survey commissioned by the National Apartment Association.

Given the current state of the real estate market, the independent 2007 survey conducted by Harris Interactive found that the majority of homeowners—65 percent—believe that there are advantages to renting as opposed to owning.

And that number contradicts what many people are used to hearing.

“This survey reflects a notable contrast to what we traditionally see,” said NAA president Douglas Culkin. “In the past, people who own their homes have generally seen renting an apartment as a stepping stone to homeownership. That phenomenon has by no means disappeared, but, across the nation, we’re seeing more and more consumers opting to rent, instead of own.”

Tax savings are a clear benefit of home ownership (see the article on home ownership deductions from AOL Money & Finance), but some homeowners who were surveyed were able to acknowledge the perks of renting.

After all, with the costs of homeownership including property taxes, private mortgage insurance and expensive repairs, and the fact that properties aren’t flying off the market as quickly as they used to, some people may see the advantages of a different residential path.

Perceived Advantages

According to RealtyTrac, an online marketplace for foreclosure properties, more than 1.2 million foreclosures were reported nationwide during 2006 — a foreclosure filing rate of 1 per 92 households and an increase of 42 percent from 2005.

And NAA notes that some homeowners who are forced to become renters because of losing their homes to foreclosure take on a new set of problems, since they must then deal with the problem of failing to qualify as credit-worthy apartment renters.

Given these data about rising foreclosure rates and the problems for affected homeowners, it’s not surprising that the subject of foreclosure was addressed in the NAA survey. One-fourth of respondents—a full 25 percent—said that “having no susceptibility to foreclosure” was a reason to rent.

Another 23 percent said that not having to worry about fluctuating interest rates was a benefit, and 23 percent also said that not being impacted by an unpredictable real estate market was a renting advantage.

There were, however, some drawbacks to renting for those people surveyed. A large percentage of homeowners—62 percent—cited the potential lack of privacy of renting as a consideration.

And while many would think that consumers would be concerned about building equity, only about half of homeowners—54 percent—said that the inability to build equity if living in an apartment or condominium is a major concern. (People who are planning to move in the next year or two, for example, aren’t necessarily concerned with building equity in the long term.)

Given the current state of the real estate market, homeowners seem to have some reasons to note the advantages of renting. With foreclosure rates rising and the existence of a fluctuating real estate market, would-be and current homeowners are having to make serious decisions about where they’re going to live, how much they can afford and whether renting or owning is the best option for them.

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