According to Zillow, between 2007 and 2013 the U.S. added about 6.2 million tenants, compared to only 208,000 homeowners. After 2008, many are still unwilling to invest a home.
For many it is still difficult to obtain a mortgage, and renting is still attractive while they save money and resources for a home. According to the Joint Center for Housing Studies at Harvard University, from 31 percent in 2004, the renter share of all US households climbed to 35 percent in 2012, bringing the total number to 43 million by early 2013. Although home values are recovering, and a number of renters can afford ownership there are many still making the choice to rent. Let’s look at some of those reasons:
- Renters don’t incur costs like the down payment of the home, closing costs, mortgage interest, insurance, maintenance, association fees, and property taxes. If you are planning on spending less than 10 years in your home, chances are it is less expensive to rent.
- Maintenance is covered by the home owner. Many repairs are costly, and replacing plumbing or appliances can add up to hundreds of dollars a year or even over the course of a month.
- Renters can use their savings towards other investments. Homes typically are not good investments. They can appreciate at or slightly ahead of the rate of inflation. If you took that down-payment amount and invested it, you could end up much wealthier over time.
- Renters have greater flexibility. Renting allows for sudden changes in your life. If you get a dream job 500 miles away, or you find out that you are pregnant with twins and live in a one bedroom condo, you may be stuck with housing that doesn’t make sense for your needs anymore. With rental housing, you can move when your lease expires. As of July 2012, the unemployment rate hovered above 8 percent. With job opportunities scarce, the ability to relocate can be a blessing. And if changes in your personal life warrant a larger or smaller dwelling, renting makes it easier to move to a place that fits your needs.
For many individuals in today’s society renting makes sense and will continue to be the choice that they are attracted to. Depending on the housing market, renting only makes the most financial sense and offers the most choices for the future.