Is Renting the New American Dream?
That's what the majority of respondents to a Harris Interactive poll said when asked about attitudes toward renting. Seventy-six percent of those who responded to the May survey said that they believe that renting is a better option that buying a home in the current real estate market. Most interesting: 78 percent of those responding to the survey were homeowners.
Even with mortgage rates at historic lows, it seems that more and more people are considering putting their hard-earned dollars into a security deposit rather than a down payment on a home. With the national unemployment rate stuck at 10 percent, people are cautious about committing to a 30-year mortgage.
Tenant Steve Hamilton told The Wall Street Journal that since selling his Carlsbad, Calif., home two years ago, he prefers to rent. "When I see a steady increase in local jobs, that's when we'll step back into the market," he said. His current rent is just one-half of what he used to pay monthly for his mortgage.
And for many, the reality has hit home, literally: A house is a place to live, not a piggy bank that can be used to finance a lifestyle to become accustomed to. While housing values rose steadily in the past decade, homeowners were able to use the equity to pay for everything from cars to vacations to home improvements. And it was a just assumed that after a few years of owning a home, you could sell it, take the profit and buy an even bigger home. It was the American way, and it fueled a decade of spending.
The recent financial crisis has changed the way people look at homeownership. "[I]t has meant that homeownership has gone from being pretty much an unmitigated good -- something that would provide stability -- and instead thrown a huge cloud of doubt over the value of homeownership for a lot of people," HousingWatch columnist Alyssa Katz told NPR in a recent interview.
With a glut of unsold homes on the market, there is no shortage of homes to rent. And that means competitive rental prices, and another reason that people might consider it a bargain to rent right now.
A report from the Joint Center for Housing Studies at Harvard, titled "The State of the Nation's Housing 2010," reports that rental vacancies have soared from 2006 to 2009, even with an increase in the number of renters. According to the study, the number of households renting an apartment or house rose by 3.4 million between 2004 and 2009. The Midwest saw the largest rise, with renters increasing by 13.4 percent. The South saw the largest number of renter households, with 1.2 million families turning to rental properties in that time frame.
While for much of the last century, owning a home was a sign of having "made it," that attitude is changing.
"When ... I sold in 2005 and moved into a rental," wrote a blogger on Housing Doom, "the usual response when we told a friend was, 'Are you guys OK?' Now, the usual response is, 'You were so smart to get out when you did.' "
It's a shift in thinking that will affect home sales for the short term. Longer term is still anyone's guess. But as long as the unemployment rate remains high, and home prices continue to flatline, the reasons for owning a home will be more about putting down roots rather than putting money in the bank.
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