It’s an ongoing, popular question: should I stay in an apartment or buy a single-family house or condominium?
For many renters struggling with the rent or buy debate, the answer often comes down to square footage.
You may think you have to buy a house to get more space, but the rental industry is starting to focus on building larger apartments that rival the square footage of free-standing homes. It’s a trend that aims to accommodate those who enjoy the conveniences of renting, but want more space for a growing family, a budding home business… or just more room to spread out and relax.
The macro unit trend
Multifamily Executive, a rental industry publication, reports that the trend towards building “macro units” is being driven by a flood of Gen Y renters who are growing up and seeking more spacious living arrangements. When they were fresh out of college, these young professionals moved to the big cities and sought micro apartments that offered affordable rents and walking-distance access to work and play. But now, as more Gen Y-ers establish their careers, they’re looking for more grown-up spaces.
As a result, apartment-building trends are changing. The demand for larger apartments only grows stronger as Gen Y-ers grow up, while many others, with recession fresh in their minds, prefer to stick with renting. While the typical apartment community was once made up of 70 percent one-bedroom units to 30 percent two and three-bedroom units, developers have begun switching the proportions. As young professionals start families or take on roommates, one-bedroom units are sitting vacant.
The Millennial Generation still wants walkable neighborhoods — areas where restaurants and shops can be found within three blocks — but they’re not yet ready to move out to the suburbs. Gen Y-ers are expected to delay home ownership not only because they enjoy the apartment lifestyle, but also because many of them tend to carry student debt and are not prepared to take on a mortgage on top of that major financial commitment.
Rent or buy?
With square footage being more equal between apartments and single-family homes or condos, would you consider staying in a larger apartment? If you’re struggling with the rent vs. buy question, it may be helpful to consider the pros and cons of each option.
The main advantages of staying in a larger apartment include:
- Lower upfront costs – just pay a security deposit and an application fee, and you’re good to go.
- Low maintenance – someone else handles (and pays!) for repairs.
- Flexibility – you can always revisit the rent vs. own question when your lease is up.
- Financial predictability – between rent and utility payments, there are fewer surprises.
With renting, there’s security in knowing exactly what your monthly costs will be. Home ownership, on the other hand, often comes with surprises, as property tax rates can change and maintenance responsibilities fall to the owner. The upfront costs of securing a mortgage and saving up for a down payment are also prohibitive for many. But there are some advantages to owning:
- Investment opportunities – profits from a home sale can be substantial, if the home can be resold in its market.
- Tax breaks – mortgage interest is deductible.
- Freedom – the place is yours, so you’re free to turn the stereo up loud and paint the place pink, if you want.
Though attitudes are changing, owning a home is still an important goal for many people. Depending on where you live and other economic factors, one particular option may well prevail over another for you, however. It’s never too soon to contemplate the factors that might move you to pick renting a larger apartment over buying a house or condo.
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