There are more renter households today than at any point since at least 1965.
Why? Sixty-seven percent of renters say it’s because, for them, renting is more affordable.
Melissa Curry, now 49, is one. Curry purchased her first home in Catonsville, Maryland, in 2006. She could commute to her job in Washington, DC, and the area is considered affordable, with a current median home value of $294,000 versus $569,000 for DC.
Change is Good – Just two years later, however, Curry accepted a higher-paying job that was further from home. After a few weeks of commuting 90 minutes each way to the new job, she reconsidered her housing options, weighing the advantages and cost of both buying and renting.
Ultimately, she decided to rent, first moving to an apartment in DC and then to a rental in Annapolis.
“There was no way I could afford to buy in DC,” she says. “It wasn’t even an option.” Renting in Annapolis lets her work in the city but live on the waterfront, with amenities like a clubhouse, gym, and pool, she says.
Who’s Renting? – Young adults, those aged 18-35, continue to be the most likely of all age groups to rent. But there are also an increasing number of older renters these days, ages 35-64, who say they have no interest in owning, according to Freddie Mac’s April 2018 research on “Profile of Today’s Renter.”
Affordability is Key – The research found that housing costs increasingly drive rental decisions.
While 67% of renters stated they will continue renting for financial reasons, that number is significantly higher for Millennials (aged 21-37), jumping 15 points from 59% in 2016 to 74%. The number of renters in multifamily buildings (versus those renting single-family homes) expressing this view jumped eleven points – from 57% in 2016 to 68% today.
And although this increase takes place in all geographic areas, urban renters are increasingly likely to continue renting for financial reasons.
But Other Factors Weigh in Too – Renting can be a smart financial choice in an unpredictable housing market. If home values decline, you won’t lose equity or run the risk of owing more on your mortgage than your home is worth.
You also can live in an area where you can’t afford to buy so you’re close to shops and restaurants, the beach, or your job.
And it’s flexible. If you change your mind, or just want to live somewhere else, you can simply give the landlord the advance notice required by your contract and go.
It’s All About Lifestyle – Renting also can also give you a sense of community.
Finally, many renters, especially those who have previously owned a home like Curry, appreciate freedom from repairs and maintenance. If a pipe breaks or the air-conditioner goes on the fritz, she calls the landlord.
“That’s something I quite like about renting,” Curry says. “I also don’t miss mowing the lawn.”
**excerpts from FreddieMac blog via Economic Focus**