As many homeowners find their American dream turned into a nightmare, it may be a good idea to reconsider renting as a worthy lifestyle choice. Here, renters share some of the benefits as they see them.
Originally posted by Karen Aho of MSN Real Estate
The attitude toward housing in this country is clear: Buy. We “aspire” to own a home and, if we’re good citizens, finally “attain” homeownership, all in proper pursuit of the American dream.
Renters, meanwhile, are relegated to the lingua of Middle Age fiefdom, their tenancy dependant on the (land)lords and (land)ladies of the nation. Even a malicious landlord retains his royal title today, albeit somewhat marred, as in “slumlord” or “ghetto lord.”
“There’s a culture of homeownership and the presumption is that homeownership is the right or best tenure choice,” says Eric Belsky, executive director of the Joint Center for Housing Studies at Harvard University. “The language we use underscores that.”
“We don’t talk about rentership rates, we talk about homeownership rates,” says Belsky, who catches himself referring to owners who “revert back” to renting. “See, I’m doing it myself.”
And yet, one-third of Americans, or nearly 37 million families, rent instead of own. (This doesn’t include vacation homes.) For some, it’s a question of affordability, while for others it’s a lifestyle choice.
Here, renters share their rationale for the renting life.
1. To escape the hidden costs of homeownership: In the nation’s capital, homeownership is an affordable option only for those families earning more than 120% of the median income of $95,000, says Peter Tatian, a senior research associate at the Urban Institute, a research organization in Washington, D.C., that focuses on social and economic problems and issues.
Those who drive out of the nation’s metro areas to find more affordable housing dump those savings right back into transportation costs, with families earning $20,000 to $50,000 spending an average of 57% of their income to cover both, according to research by the Center for Housing Policy. (See this .PDF file for more information.)
What’s your home worth?
Even in more-affordable areas, homeownership can prove too costly. Buck Bannister and his partner bought a two-story carriage house with a big yard in South Carolina for $60,000. Then came needed incidental repairs, along with a roof fix and a new sewer line.
After practically draining the home loans, each suddenly was hospitalized with a serious medical condition.
“At that point if you have a home, as the conventional wisdom plays out, your home is your greatest asset and you can tap into those assets. The problem is if you’ve had to tap into those assets to make the home livable, they’re not there for other things,” Bannister says.
Bannister and his partner each recovered, and they sold the home. They could easily have afforded another, but now happily rent a $675-a-month duplex in Tucson, where they landscape the yard and enjoy the neighborhood.
Renting versus Buying
“It’s home to us, it’s not just a place to crash,” Bannister says. “We love it. The only way we would do anything else is if we won the lottery and were independently wealthy.
“I have friends who have bought a house and something happens and they realize: I don’t own this house, I rent it from my bank and I have to pay to keep it up,” he says.
2. Access to urban amenities: “Everything I need is within a mile or two,” says Sam Higgins, 29, who rents with his fiancé in Austin, Texas “I can be downtown in five minutes.”
His fiancé’s aunt, a real-estate agent, frequently pitches the idea of buying, which the couple shakes off.
“We could afford something, but it would be more money and a smaller space for us to do that,” Higgins says. “And if I’m an hour’s drive from what the city has to offer, then it’s not really worth it to me.”
3. Cash availability: Joshua Crumbaugh, 27, works for a mortgage company but resisted the temptation to buy when, he jokes, “you could more easily get a mortgage than a cell-phone plan.”
Instead, he rents “a lot of house” for himself, his wife and their two children for $1,100 a month in Huntsville, Ala., and keeps his cash free for a potential business launch.
“There are a lot of things that you can do as opposed to purchasing a home,” Crumbaugh says. Plus, a buyer who ends up in the hole on a home investment “has got no room to borrow anything against the house.”
“I’m in the mortgage business. I want everyone to believe that (their home’s value is) always going to go up. But the reality is it’s not always going to go up.”
Even in the long-term market, a house doesn’t necessarily make for the best financial payout. Unless a home’s value rises at a substantially greater rate than inflation, the money might be better off in alternative investments.
According to the National Multi-Housing Council, an industry trade association, $100 put into a house in 1985 would have been worth $210 in 2008; in stocks, the same amount would have been $710. Even if your portfolio took a 50 percent hit in the past 18 months, the figure would still be $355 today.
Furthermore, home prices remain overvalued compared to rents in many areas, say experts. (Read “34 cities where it’s still better to rent.”)
The only rental drawback for Crumbaugh is the tax inequity. If he owned and paid the same monthly check, he’d be getting $2,700 in refunds this year instead of $700. “It makes a very big difference,” he says.
4. Simplicity: “We got rid of half of the things we owned and we haven’t missed a single one of those things,” says Beth Perry, a United Methodist minister who rents in Queens with her husband.
Zipporah Sandler also appreciates the simplicity of renting.
“People always ask, ‘Why don’t you buy?’ ” says Sandler, a 50-something retiree who rents a 2,700-square-foot Mediterranean house in a luxury South Florida community for less than it would cost to own a 1,000-square-foot condo.
She and her husband had planned to buy, using cash from the sale of their New England home, but to their surprise discovered after five years of renting that “life has become much easier,” she says. “I absolutely love it.”
5. Mobility: Perry’s husband is an actor who recently auditioned for a part in London. That could mean a sudden relocation. “You never know what will come next,” Perry says.
Eric M. Hamilton, 36, a civilian public affairs specialist for the Army, echoes this sentiment. He owned a house in Anchorage and loved it, even sunk money into renovations. Then the military transferred his job to California.
“I moved in June, and I’m hoping to close on the Anchorage house by the middle of May, so 11 months of paying a rent and a house payment together does not for a happy bankbook make,” says Hamilton, who is married with three children. He now plans to keep renting. He likes that he can easily upgrade to another house nearby, without worrying about having to sell, and that he can take advantage of military amenities that exist close to rental units.
“My grandmother rented her home for 50 years in Oakland, lived there ’til the day she died,” Hamilton says. She owned a business, and “took fantastic care of the house. I know that being a renter doesn’t mean being a transient or being a shiftless person.”
6. Diversity: “I find the people refreshing,” Bill Moore, 59, says of the tenants in the downtown Chicago high-rise where he and his wife rent a unit on the 39th floor. Many are young business professionals, and they mingle frequently in common areas.
He and his wife own a house downstate and had planned to buy a condo in the city, but their rental apartment has turned out to be comparable in cost while offering better service, a higher floor and a wider variety of neighbors.
“You really do get a mix of people, and you’re happy for it,” Moore says. “It’s a variety that you’re just poor without.
“The only downside is if the market appreciates I’m not going to get the appreciation,” he says. “But I’m 59; it’s not my goal in life.”