The New Renter Economy
Renters plan to stay put for longer, buy homes later
Rising rents used to push renters into homeownership, but not anymore. In this post-housing crisis economy, renting is now a long-term venture.
The national homeownership rate has dipped to 65 percent, the lowest level since 1995.
Today, renting is not just for the young urbanite.
Renters now are more likely to rent a single-family home than an apartment. They are twice as likely to have children and a higher median household income ($75,000 to $100,000). They place a premium on neighborhood amenities and good schools.
Most surprisingly, these single-family-home renters say they plan to stay put for at least five years, according to a survey for Premier Property Management.
In fact, some 30 percent say they plan to be long-term renters, compared to 24 percent of traditional apartment renters.
“The desire to become a homeowner hasn’t diminished, just the ability,” says David Crowe, chief economist at the National Association of Home Builders, a trade group. “There is a period in which renting makes more sense at the moment.”
In Chicago, 21 percent of single-family homes are now rentals, according to a study by DePaul University’s Institute for Housing Studies. The Chicago suburbs, Cook County in particular, has seen a 30 percent increase in single-family home rentals.
Even as the housing market recovers and pending home sales are up, the homeownership rate has slipped because investors have flooded many markets with cash.
According to the National Association of Realtors, there are nearly 1.6 million distressed homeowners in some stage of the foreclosure process, and almost all will eventually become renters.
The silver lining is that 60 percent of single-family renters say they plan to purchase a home after renting.
© CTW Features