5 Things You May Not Know About Renting
The American dream, for many people, used to be the house with the white picket fence, a dog, and two kids — but that dream is changing fast. Financial inequality, runaway real estate prices, and different priorities lead many people, particularly younger people, to rent instead of buy. Owning your own home has often been considered a big step up from renting, but there are some compelling reasons to feel otherwise.
The rental market is booming.
For real estate owners looking to rent out their properties, the news is encouraging. The U.S. rental industry has increased by nearly 3.4% since 2014, bringing in over $176 billion in revenue in 2019. The monthly median asking rent for unfurnished apartments in the United States increased by nearly 50 percent between 2008 and 2018. Investing in rental property is worthwhile.
The rental market often spikes during the summer months, when a sudden surge of vacationers leads to shortages in rental properties. Airbnb in particular is always in need of new hosts, especially during vacation season. So if you have a property (or even a spare room), you could make some easy cash off it.
It may be smarter to rent than buy.
But are those rising rental prices good for the renter? Well, not necessarily But even despite those prices increases, there are a number of reasons why renting may still be a smarter move financially than buying a home.
- Maintenance and repair costs are usually negligible for renters. Any homeowner can tell you that getting the roof or the sewer repaired can be a huge expense; when you rent, that’s the landlord’s responsibility to take care of.
- Depending on the property, renters might have access to amenities that homeowners might not, such as a gym, fitness center, or pool.
- Renters don’t pay real estate taxes, which can be a surprising and difficult burden for new homeowners who don’t know how much of an impact they can have.
- Speaking of unexpected expenses, homeowners insurance can be another major financial hit for the unprepared. The good news is, renters insurance is much cheaper.
Homeownership isn’t as popular as it used to be.
As mentioned above, the American ideal of buying and owning a home is becoming less popular among the younger generations. Some don’t plan to ever buy a home — in 2019, 12.3% of millennial renters nationwide plan to always rent, compared to 10.7% a year ago. Why? The reasons cited include:
- They can’t afford a home. The sad reality is, home ownership is now financially out of reach for many younger people, and with no sign of that changing anytime soon (or ever), many of them are just staying renters.
- They think owning a home is a financial risk. With the employment landscape being as unstable as it is, many younger people find the possibility of defaulting on a mortgage or seeing their home lose money too great a risk to bear.
- They don’t want maintenance and other home ownership expenses. Again, this comes down to the elevated financial insecurity many younger people live under. Most Americans have very little in terms of savings, and a surprise expense is not something everyone can deal with.
- Renters tend to have much more flexibility to downsize if their living situation changes. If you need to move into a smaller place to help make ends meet, that’s a lot easier to do with a rental than trying to sell your house.
Even seniors aged 55 and up are increasingly becoming renters with a 28% increase between 2009 and 2015. Some have even met with difficulty “scaling down” their living situation as they get older, as there is a shortage of smaller homes for them to move into — which means renting might be their only option.
You can remodel a rental.
Some people think that making a rental property their own is an impossibility, reserved for homeowners. But (depending on the landlord) there are actually some things you can do without breaking your lease.
Rentals can be repainted with a fresh new color to give it new personality and life. Lighting fixtures, which are often low-quality by default, can be swapped out or even upgraded with a ceiling fan. The same goes for light switches and kitchen cabinets, which can be changed from the cheap, often ugly defaults to something far more attractive.
While some landlords might disallow this, most are likely to embrace it, as those kinds of improvements will add value to the property should you decide to move on.
A lifetime of renting isn’t for everyone — a lot of us still aspire to have that beautiful home that’s ours free and clear. But for people with different life priorities, renting is more than just a stepping stone — it’s a long-term solution.