I love this question. Browsing through different websites, I always see the same articles regarding home rentals: “Buying a home is much cheaper than renting!”, “Why people continue renting, if their monthly rent can cover mortgage payments?” and “American dream is to own a home, not rent it!”
I don’t disagree with those articles and I don’t think anybody does but this topic is much deeper than it appears. Of course, in theory it is very simple. If you can pay the same amount or even less for paying off the mortgage, rather than just renting and spending money to buy time, you should do it right? Well, not really.
Times are changing; we are not living in the Clinton era anymore.
Community Reinvestment Act-intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods.
Owning a home is not a priority any longer. People are changing careers every couple of years in search for something better. They want to experience living in different places, meet new people, and be exposed to new environments. Time of working at one company and living in the same neighborhood your entire life has passed. People are very transient these days. They don’t want to commit to being in one place for a long period of time. It scares them. Nowadays, everything what we do is short-term because we don’t know what we will want in the future. Millennials just have a different mindset than baby boomers.
(69% of New Yorkers are renters)
Turning to rent, rather than buy, is just a consequence of our way of living and thinking
I don’t want to go into benefits of renting because I talked about them already. OK, back to the topic. So why do we rent? The answer is very simple: because we want to. In the long term it doesn’t make sense financially and we know that but we don’t think long term nowadays. There will be people saying the switch to renting is because of the banks and tight credit.
True, this is also one of the reasons, but the main reason is because we just don’t want to settle down. People, who buy apartments and houses, mostly buy them as an investment so they could rent them to people who will be there temporarily; not to live in them.
I guess the thought of living in one place the entire life is just not an option for Millennials.