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There is a fairly standard image people have of someone who rents. For decades, we would imagine a renter to be a single person or a young couple just starting out. Owning a home was always considered the ultimate end goal, especially for people starting families.
However, that changed over the past few years. With affordable housing no longer readily available in the US, many families were choosing to continue renting indefinitely. It did not help that homeownership no longer seemed like a great way of investing your money. Alternative ways of investing funds offered much higher returns. In light of the housing bubble crash of the 2000s, they also seemed safer.
Associated costs of renting are also cheaper. How much renters insurance you need depends on the size of your family and the value of your possessions, but it will always be many times less than homeowners insurance.
Renting was becoming a popular choice even for people who could afford to buy homes. But the past two years have changed the world significantly. What was once considered a smart financial decision may now no longer make sense. Does this apply to rent as well?
The problems with renting in 2023
There are a number of reasons renting in 2023 is no longer as attractive as it was a few years ago. These include the following.
Affordability
COVID-19 put many people out of work. Millions of Americans who were renting homes no longer had any source of income. This could have led to mass evictions, but the government put a moratorium in place to prevent a surge of homelessness. While this angered landlords, it was necessary to keep people safely housed.
That eventually had to come to an end, and with unemployment going down, people could once again pay rent. The problem was that many landlords had missed out on months of rental income. The rent they were charging before the pandemic no longer made sense if they were to make ends meet.
This is one of the reasons rent has gone up over the past year or so. People now have to pay a higher proportion of their income towards rent, and paying such high prices for a home that will never be yours is not the best financial approach. With record high inflation, rent may go up at an even faster rate.
Stability
The pandemic showed many people another disadvantage of renting. When renting, you do not have the same stability as you do when you own your home. Technically, most people are paying off their homes for decades and will lose their homes if they stop paying. But you get to treat the home as your own.
When people had to start working from home, homeowners could renovate a space into a home office. When landlords were demanding rent, banks and other mortgage providers could take a step back and apply a gentler touch. There is a sense of stability that comes with owning your home, and that is very attractive in such an uncertain world.
Income Sources
Inflation is just one reason why many people are now struggling to pay the bills. Finding extra income sources has become imperative for millions of Americans. When you own your home, you can rent parts of it out.
There are landlords who will allow you to sub-let, but it is much more difficult and you will earn less than you would with your own place. Renting out parts of the home you are living in is no one’s idea of a dream life, but it is a way to bring in much-needed cash.
Reasons to rent
However, that does not mean there are no reasons for families to continue renting in 2022. For many, buying a home is just not possible, as they do not have the savings to make a downpayment or the credit score to get a loan. It’s also true that the price of housing in the US has been soaring for the past year-and-a-half. Property is more expensive than ever before.
Most people would prefer to be in a situation of homeownership in 2022, even if renting seemed appealing a couple of years ago. The unfortunate reality is that this is just not possible for millions of Americans.
Jane Doe
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Owners come out ahead of In at least seven major cities in California, long-term renting is cheaper than owning a home. Renters save $900,540 on average in California over a 30-year period. in at least 51 U.S. cities. On average, owners saved $175,811 over a 30-year period.
They may use your relationship as a way to take advantage of your agreement. For example, they may start looking for a discount or extension after a few months.
If anything goes wrong, it could affect your relationship. ...
The national homeownership rate is 66%, which means that 66% of households own their home while 34% rent. This rate has held steady over the past year.
First and foremost, homeownership means that you are tied to a specific living situation whereas renting affords more freedom in retirement. Instead of spending your time worrying about mortgage payments and repairs, renting allows you to spend your time exactly how you want to spend it.
While recessions can create downward pressure on rental rates due to decreased demand and financial hardships tenants face, the extent of the decrease and its duration can vary depending on location, market conditions, and government interventions.
Unfortunately, the way renting to friends or family often works out is far from what would be expected between people who care about one another. For the most part, friends and family members will actually make bad renters, because they'll expect more from you than a tenant who doesn't know you.
They will likely take advantage of you. You become the family pariah at every family gathering – there will be tension between the whole family, even if they aren't a party to the lease. You now have a new definition of taking out the trash.
Perhaps the most obvious financial benefit of living with parents is savings on rent and bills. With rent taking up a major percentage of many people's budgets – the expert rule of thumb is 30% of your income or less – that can be a big savings, even if your parents still charge you a small amount.
As of 2022, 84.6 million out of a total 129.9 million households own their homes. 45.2 million households rent their homes. 2.7% of occupied housing units are second homes. 10.4% of all housing units are vacant, down 2.88% from the previous year.
Renters make up a much larger share of households in California (44%) than in the rest of the US (35%)—or in any state other than New York (46%), according to the US Census.
After plugging in assumptions on investment returns, maintenance costs, home appreciation and other factors, the retiree would come out ahead financially by renting for less than five years. If the retiree plans to stay longer, buying would be a better choice.
Renting can be less expensive as you skip the burdens of property taxes and maintenance costs. However, owning can be less stressful since you don't have to worry about a landlord raising your rent. Whichever route you go, housing costs will be one of your major monthly expenses in retirement.
Absolutely. The Equal Credit Opportunity Act's protections extend to your mortgage term. Mortgage lenders can't deny you a specific loan term on the basis of age.
It's generally cheaper to rent than own in the country's 50 largest metropolitan areas, according to a recent study by LendingTree. Between median rent costs and median homeowner costs for those with mortgages, tenants came out ahead by $563 per month in 2022.
Renters have lower utility bills, greater flexibility in where they live, and access to amenities, such as a pool or fitness room, that might otherwise be prohibitively expensive.
Wealthy renters live mainly on the coasts, specifically in California, New York and Washington, D.C. San Francisco, CA held second place in the number of millionaire renter households, but had the biggest spike between 2015 and 2020.
Introduction: My name is Dean Jakubowski Ret, I am a enthusiastic, friendly, homely, handsome, zealous, brainy, elegant person who loves writing and wants to share my knowledge and understanding with you.
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