Renting vs Buying

Millions of people aren't planning on buying homes any time soon. Most of them aren't even considering it as an option for a variety of different reasons. This is a demographic known as the “perma-renter” and it’s a group that is growing in number every day. There are many reasons why the renting versus buying margins are tipping.

Many previous homeowners have dealt with foreclosure, particularly after the housing crisis hit. While quite a few of them did get everything back on track and still went on to purchase a home, many took another route. The feelings associated with foreclosure don’t go away easily for many, and that is one reason that they choose to be long term renters, even when they have rebuilt their credit.

The flip of that is the fact that lenders aren't lending the way that they used to before that crisis. The type of loan that many claim lead to the crisis- the adjustable rate mortgage, was much easier to obtain in the past. Because the lenders that offered that type of loan are under a great deal of scrutiny for having done so, it’s a bit harder to get loans for the average person than it once was.

Additionally, they’re also requiring much higher down payments than they did before. Recently, lenders have been shown to require as much as 20% down at closing. This is usually much more than a lot of people can afford. Economists also predict we won’t be seeing the extremely low interest rates we had during the Recession, and as they do rise, less people will buy properties.

Another factor that makes people want to rent rather than buy is the job market. Hiring has remained fairly slow, and job creation isn't that great. Depending on the source, it can seem hopeful, but others say spikes in those numbers are due to very low wage jobs: so not much help there. For people who have been under-employed, or lost their jobs, there is a tendency towards caution that is understandable. Additionally, on the plus side for renting versus buying: if you find a better job somewhere and you have to relocate, it’s much easier.

So, when you have these economic factors coming together, it’s not really a great surprise that a new demographic is rising up out of that. Long term renters are not seen the way they once were and there is no negativity or stigma attached. This has become the way of life for those who understand that renting poses much less fiscal risk but can offer much more freedom than owning a home.

As this happens, more property owners and management are adapting, they’re working with the changing demographic to offer them new options that appeal to them in amenities. Such tasks can be done easily through an excellent property management software. Have you thought about how the trends in renting versus buying are impacting the way you run your properties and what you have to offer?

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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