The headlines are everywhere, from the New York Times to small college newspapers. People are choosing to rent homes instead of buying them. Since the housing bubble burst in the early 2000s, the market has been shifting in this direction. Real estate experts predict that the number of renters in single-family homes will continue to soar, going from 15% to 50%. Here are a few reasons why that may be, and how things are changing to accommodate this new upswing in the market.
Poor Credit, Low Cash Stores
Buying a home with bad credit is tough, and it can take a long time to come back from a stretch of poor credit history. Due to economic status, many people are short on cash needed for a down payment or for the unpredictable upkeep expenses that accompany homeownership. Life goes on, though, and people still need a place to live. And so, they choose a rental home.
Less-Than-Ideal Market Conditions
It’s a seller’s market right now, meaning home prices have swollen significantly. Inventory of homes for sale tends to be low in most areas, and when an appropriate listing pops up, a bidding war ensues because more people want to buy a home than homes for sale in many areas.
Take the following scenarios into account: If you wind up paying more for rent due to a competitive market in your neighborhood of choice, you’ll have a chance to move and make a change at the end of your lease, with no skin off your back. Sure, you might pay more than you’d like for the next year, but it’s not forever. However, if you pay significantly more than a home is valued at when buying, you may not ever be able to recoup the loss.
It’s not as important to people these days to own their homes. Choosing to rent isn’t thought of as less-than, as it maybe was once upon a time. There’s less shame in renting instead of buying a home than in generations past. This is probably due in part to shifting cultural norms that mean people want experiences more than things. Also, homebuyers of today, having recently lived through the recent housing market crash, are potentially more cautious to be caught underneath a large mortgage. Renting allows for a steadier outflow of cash.
There has been a significant increase in the number of people choosing to rent single-family homes. This indicates that people don’t necessarily want a care-free renting lifestyle that apartment or townhouse living provides, but that their motivations are still economically driven.
More Renters Means Higher Rent, Less Availability
Because more people are opting to rent, rent prices are rising, as well. The competition to get into existing rentals can be intense, and there are even invitation-only rental deals out there due to this.
This means that current homeowners are deterred from selling their homes and renting instead. However, there’s a way they may be able to have the best of both worlds.
Residential Sale-Leaseback Gives More Rent Options
Residential sale-leaseback is a relatively new concept to help current homeowners forgo their big mortgages, collect the equity in their home as cash in their pocket, and rent that home instead. EasyKnock’s sale-leaseback programs allow you to sell your home to them, converting the equity into cash, while staying in the home as a renter. Learn more about EasyKnock’s sale-leaseback solution today.
There’s no denying that owning a home is becoming the less popular option for a number of reasons. If you may want to rent, talk to your financial advisor to see how it could benefit your finances.