6 reasons to rent
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.
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.
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.
“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. (Read “Why rent? To get richer,” on MSN Money.)
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.
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