Talk about no hassles…no property taxes, no 30-year mortgages, no down payment, no real estate agents, no home stagers. No wonder home renter-ship is booming among singles and families alike who want a “house feel” with no hassles.
In the past year alone, developers around the country built more than 40,000 homes to be used as single-family rentals, according to the National Association of REALTORS® (NAR).
One of those developers, Josh Hartman, CEO of NexMetro, began building single-family home rentals in 2010. “It was after the housing crash and people were losing their homes.” Hartman thought people who had experienced foreclosure would want to be renting single-family homes rather than apartments until they could build up their finances and then buy another house.
Hartman was wrong. Instead of wanting to buy another home, “the people who walked into our office had great credit, they had money for a down payment, they had great incomes but they just didn’t want to own a home. They were lifestyle renters, renters by choice.”
Hartman saw three types of lifestyle renters: recent divorcees, aging Boomers who didn’t want the headaches of homeownership anymore and Millennials who saw their relatives hurt by the housing crash. Those Millennials are also seeing housing prices go up and up and they’re nervous about another housing crash.
But, isn’t lifestyle renter-ship violating the fundamentals of personal finance? Aren’t home ownership and building home equity the most powerful ways for most people to accumulate wealth in this country? William Wheaton, a housing economist at MIT, says, “Yes.”
“Rental homes are fine in the short term, “said Wheaton, “but I hope that young people don’t wait too long to buy. If prices continue to rise…buying (a home) will be a money tree. But even if you’re very cautious…(home prices) will inch up a few percentage points each year and over 5-10 years, those few percentage points add up to a sizable nest egg. And that’s what you’re giving up by renting.”
Thanks to Chris Arnold of NPR for source data.
Also read: https://timandjulieharris.com/2019/09/20/win-over-fsbos.html, https://timandjulieharris.com/2019/09/04/podcast-what-to-do-when-disaster-strikes-your-market-2.html, https://timandjulieharris.com/2019/10/11/tips-to-help-your-clients-save-money-on-a-mortgage.html