With housing being the most affordable it has been since the mid-1970’s, why are Americans choosing to rent instead of buy?
Many good things are to come by investing property, one of the best ones being the extremely high returns that can be received.
With mortgage rates at an all-time low, many areas with generally inexpensive rental properties are still proving to be more costly to live in, relative to the alternative of buying into the housing market.
The National Association of Realtors is even expecting rent costs to increase up to 5% over the upcoming years, giving any person a difficult purpose to justify renting over buying.
Caitlin McCabe suggests that part of the hardship is a “housing hangover” that was caused by the market crash of ’08. Many American homeowners are still experiencing a considerable loss while they have more to pay on their mortgages then what their home is even worth.
McCabe also did a study in which she found that less than one-third of those that lost their homes due to foreclosure plan to return to home ownership. This, proving that the majority of Americans are remaining scarred from the crisis.
Though, an economic event that happened 10 years ago, it caused over 9.3 million people to lose their homes to foreclosure and the others left to pay off an insensible mortgage.
Something that sounds as if it should have passed by now will leave an everlasting impact on the American citizens and will be a long road to recovery…..
Though the financial crisis of ’08 is a large factor in the overall housing shift there’s one other factor I believe to be much more prominent.
Since Millennial’s have begun entering the housing market themselves, we have seen the dramatic shift begin to take place. Why millennial’s? They lived through the financial crisis but they hardly suffered any losses themselves.
The answer is simple…The shift in lifestyle between generations. It’s typically obvious to an outsider to spot differences among people that specifically signify gen X from Gen Y and so on. However, the shift from Gen X to Gen Y was a drastic one.
It could be due to the way millennial’s (Gen Y) were raised in a fast-changing technological world that many generations prior to them didn’t get to experience.
Millennial’s today are characterized as free-spirited, likely to move between jobs, and receptive to new ideas and ways of living. With this in mind, think of the difficulty owning a home would be to accommodate your everyday lifestyle.
Millennial’s are also in the age group in which they are recently out of college and struggling in deep debts from their years spent studying. This, only adding to the difficulty posed when purchasing a home, and furthering themselves in debt.
Perhaps it’s a simple shift in lifestyle change or perhaps its fear of another financial crisis, we know one thing is certain….current Americans looking to rent, should begin looking to buy.
It has been long said that renting is essentially wasting your money. It’s money being spent to live in a space that isn’t your own and is returning no value to the investor.
The question is, is the renting vs. buying argument something that is highly reliant on an individual’s lifestyle? I think so, and therefore, it can be predicted that renting will be the new American trend.