Renting has always been an option, one that most use as a gateway into homeownership. At least that used to be the case. As the economy changes, and the millennial generation creates its own lifestyle trends, the importance of owning a home is changing. The appeal of renting, long term, is on the rise for many reasons.
From a decreased need to own a home to a variety of specific benefits, more people are opting to rent. Where do you weigh in on the choice?
The American Dream of the mid-20th Century looked something like this: a steady job, a spouse, a family and a house. Owning a home was part of what previous generations aspired to have to define success. That's no longer the case.
People “aren't just renting because they can't buy ― they're choosing to rent because it affords them better personal and financial opportunities," says Casey Bond from The Huffington Post. This change in the perception of homeownership is modifying the definition of the American Dream. It's becoming more about financial comfort in where you live. It's not about what you own, but whether you're living on your budget.
This upswing in renters means that “more U.S. households are headed by renters [today] than at any point since at least 1965," according to the Pew Research Center. As of 2016, 36.6 percent of households were renters.
Renting trends like this are also impacting how people think about real estate. The goal is no longer to find that perfect home to buy, but the perfect place to live. That means many can end up considering renting at some point during the buying process.
According to the Zillow Group Report on Consumer Housing Trends, “Thirty-seven percent of first-time buyers are seriously considering continuing to rent, and 12 percent of repeat buyers are seriously contemplating renting their next home instead of buying it." This shift in perception of how to find a home demonstrates the continued appeal renting can have on people today.
The reason for the shifting American Dream, as it relates to housing, may be the key benefits of renting. Renting can create a reasonable, long-term choice that fits seamlessly into a person's preferred lifestyle because of what it can offer.
First, renting introduces flexibility when it comes to one's living situation. As a renter, you have the ability to relocate whenever necessary without having to worry about selling property.
You maintain the ability to move around and explore options, both personal and professional, that may take you somewhere new. There's often more choice in neighborhoods and locations around town, as well. If you can't afford to buy a home in your perfect community, you may find a rental that fits into your budget.
With affordable options in both urban and suburban areas, you have options to get closer to a city center or find a place that's a little quieter and laid back. The biggest perk is financial flexibility since you're not locked into the long-term financial commitment of a mortgage.
While owning a home doesn't mean you're denied access to basic amenities when you rent, you don't always have to pay extra for them. Many apartment buildings have on-site gyms and other services you can access at no additional cost. Rather than pay a variety of membership or service fees, you get both proximity and affordability as a renter.
Apartments can also feature all the upgrades you want in a home without you having to renovate and pay for things yourself like:
You can even find apartments today wired as smart homes, with all the latest technology. The best part is you didn't have to install everything and you didn't pay to buy it. As a renter, you have the ability to find the type of home you want. You don't have to settle for a fixer-upper that you own, but have to pay to upgrade
The support of a property manager is huge when it comes to maintenance. With the responsibility for major repairs and upkeep on them, you get back time, which is a valuable commodity.
It's not your job to track down a repair person when something needs fixing in your rented apartment. You don't have to invest time comparing pricing and scheduling the service call. What's even better, you don't have to be there while the repair is being made. Your property owner or manager handles everything for major repairs.
The old saying goes, “if it ain't broke, don't fix it," and many renters are applying this philosophy to their living situation. They're happy as renters, so why go through the motions of buying a home?
In fact, 46 percent of long-term renters are happy, according to the Zillow Group Report on Consumer Housing Trends. They're satisfied with the price they pay and the area they live in, with no desire to go through the stress of moving.
This contentment may stem from the fact that renting trends include more than housing. Today, you can rent almost anything, from movies to music, cars to clothes. “Having all of these options available to us suggests that people's view of ownership is shifting," says Robert Pinnegar from The Washington Post.
This change, which makes renting a more common go-to across the board takes away the stigma that having something temporarily is somehow bad, leaving tenants happier in their situation
According to The Lenders Network, the average down payment for a house is about six percent of the home's purchase price. This money has to come from your savings, 401K or an investment account. You must have the funds available yourself, so you can't take out a loan for your down payment.
Anything less than 20 percent down and you also have an extra monthly charge on your mortgage known as private mortgage insurance (PMI.) This tacks on another .5-1 percent of the total loan amount to your monthly mortgage payment. The takeaway here is buying a home requires a lot of money upfront, more than you need to rent an apartment.
Renters can also receive financial breaks by adding a roommate or significant other to their lease. Even parents lessen the financial burden for younger renters. Sharing expenses and a smaller monetary requirement upfront can mean an easier budget to maintain. It can also leave you with extra money you can invest elsewhere, where yields come quicker than from homeownership.
Another financial bonus for renters is not paying property taxes or homeowners insurance. While you'll still need to have a renters insurance policy, it's a much smaller cost. It can also be easier to pay off existing debt, like a student loan, since you're not accruing even more debt through a mortgage.
As homeownership drops further and further down the list of priorities for many people, renting one's home becomes a more appealing and permanent option. The benefits of renting provide a solid argument for the choice, as well.
It's nice to come home to your own home every night, that you pay for and maintain. It's also equally as great to not have the financial burden of homeownership. The great thing is that both choices work. You only have to decide which is right for you.
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