Lifelong Renters Dodged the Housing Bust but Not Buying a Home Could Cost Them

Isra Hashmi is one of the lucky ones.

And even so, she's watched her mother sink under a $700,000 mortgage for a home in California that she never could afford to begin with on a physician's income. Hashmi's mother eventually had to walk away from the house. She's seen her brother have to abandon his home, too, after his clothing business failed and he was foreclosed on. She stood by a friend who lost tens of thousands of dollars in a short sale when it was the last option to get out of a mortgage that was burying her in debt.

But Hashmi herself has never had to face what her friends, family and millions more Americans have as the crippling housing crisis unfolded. She might be the only one she knows who hasn't.

%Gallery-165256%
That's because, even at the age of 39, Hashmi has never owned a home -- and she may never after seeing what's happened to everyone around her, she said.

A lifelong renter, Hashmi (pictured at left with her husband and three children) is in the minority of Americans who have never taken the plunge into homeownership. (Despite slumping to a 50-year low, the rate of U.S. homeownership was estimated to be 62.1 percent in the second quarter of 2012.) But she's likely among a majority of lifelong renters who today count themselves blessed or lucky that they've never owned a home. These are the few who have made it through the housing crash and resulting foreclosure crisis virtually unscathed.

"I'm still the only one I know who has never owned," Hashmi told AOL Real Estate.

It's not that she hasn't come close. Eight years ago, when Hashmi and her husband lived in Tucson, Ariz., they were on the verge of buying a home there.

"It was the middle of the housing boom, and homes were popping up everywhere," she said.

But when it came time to make an offer, Hashmi's husband raised a red flag. He realized that the mortgage their bank was offering them was way out of their budget.

"He said, 'This is freaking me out. I don't make enough money to afford this,' " Hashmi recalled. "He had the sense to realize that we couldn't afford it. And then we couldn't understand why we would even be offered this loan."

The couple decided against buying. A few years later, the housing crash would hit, as millions defaulted on loans that they couldn't afford and shouldn't have been able to qualify for in the first place. Four million people would lose their homes to foreclosure, and more than double that would face the same possibility.

%Gallery-164571%
"We looked at each other in relief and said, 'Do you realize what we just escaped?' " Hashmi recalled.

Today, the couple rents an apartment in Boston with their three children, and Hashmi said that they don't have any plans to buy in the future, even amid record-low mortgage rates and far lower home prices.

Even though renting might have saved people like Hashmi from deep pain as the housing bust took hold, is shying away from buying a home a winning strategy for the future? Not necessarily.

According to a Zillow analysis in August, buying has become a better financial option than renting in 75 percent of U.S. metros, where it takes an average of three years or less of owning a home to break even with what you'd pay in rent over the same time period. (Home prices are down about 30 percent from their peak in 2006.) In Boston, where Hashmi lives, it would take a while longer to break even: 4.8 years.

Stan Humphries, Zillow's chief economist, said that lifelong renters "have played the smart money for the last five years" by staying out of the buyer's market, but the fortune in that decision is turning a corner.

He pointed out that historically, over the last century, home prices have risen at an average rate of 0.5 percent to 2 percent per year.

%Gallery-163720%
"Despite what's happened in recent years, housing is generally a non-depreciating asset," Humphries said. "We think we've hit bottom on home values.... The steep drops are behind us."

The renters who avoided catastrophe during the housing slump have a golden opportunity to gain wealth by buying now as home prices are climbing back, Humphries added.

That's an argument that could potentially persuade Gerald Poindexter. The 43-year-old San Diego resident (pictured at right) has been a renter all his life, and he said that he felt like he "dodged a bullet" during the housing crisis.

"But never say never," he said about the possibility of buying a home in the future.

Poindexter said he mostly has stayed away from buying because of the overwhelming responsibility of owning a home.

"Your home starts to dominate every aspect of your life," he said. "You stay in a job you hate just to keep up with the house." And when the housing bubble burst, it only affirmed his decision to remain a renter.

But "I love a good deal," Poindexter said, referring to the deals available because of battered home prices. "If the right opportunity came along, I wouldn't say no."

Then again, have longtime renters really survived the housing bust without a scratch? After all, rental prices have soared across the country as ex-homeowners who lost their homes have flooded the rental market.

Gary Malin, president of New York City-based realty firm Citi Habitats, has seen some of the worst of it. Rental prices in the market that's already America's most expensive have beaten record highs multiple times over the last couple of years.

Still, Malin said, judging whether a renter has gotten off scot-free during the housing crisis depends entirely on individual circumstances.

"If you were in a position to buy at the height of the market but didn't, then you're still way ahead of the game," he said. But if you were only financially capable of paying average rents at the height of the market -- when they were much lower than they are now -- then today's surging rental costs are likely hurting your bottom line a lot more, he added.

Hashmi admitted that rising rents have been a struggle for her family. Their rent has gone up every year for the last three years that they've been in their Boston apartment. She said that they are considering moving outside the city to find cheaper rental rates. But for her, that still doesn't outweigh the comfort of being free of mortgage debt.

"It's the most amazing feeling to go to bed at night and be debt-free," Hashmi said. "There's nothing else like it."

See also:
Best Suburbs for a Slower Pace of Life
Romney's and Obama's Housing Policies
Election 2012: Will It Affect Your Decision to Buy a Home?

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find homes for rent in your area.

Follow us on Twitter at @AOLRealEstate or connect with AOL Real Estate on Facebook.