This question has been a topic of many conversations for a quite some time right now. It seems that the American dream of owning a home is becoming just that, a dream. More than 35% of Americans are renting rather than owning a home and that number keeps increasing at fast pace. In a perfect world, everyone would own their homes because who, normal, would want to pay for a space which he/she will not end up owning? But how realistic and feasible is it really to own a home? We are living in very transient times where everything has a very short life span so can someone really lock themselves in a 30 year mortgage? Let’s see the benefits of renting and how it differs from buying a home.
Following are some of advantages of home renting:
Flexibility: Rental leases typically last for one year or less. There is no long term commitment when renting. Landlords in high turnover areas are even more flexible if you wish to get out of the lease, so you can even terminate the lease before it ends (there might be a small penalty fee).
Less responsibility: Being a renter, you are not responsible for making any improvements or fixing major problems in the apartment. If refrigerator stops working or the pipe burst, the owner will have to spend his money to fix it. It doesn’t fall on your shoulders. Although you will be responsible for minor fixes (changing the filters in AC unit…), it can’t compare to the expenses of large fixtures. This doesn’t mean you should go bursting pipes in your apartment but the normal wear-and-tear is the responsibility of the owner.
No Debt: When renting, the only requirement for you is to pay your monthly rent. You don’t have to get into debt and get a mortgage, which can be a large financial burden. Getting a mortgage is a long–term liability which has to be a carefully considered decision. If one runs into financial trouble, it is much easier to reduce monthly expenses without the added burden of being locked in a mortgage.
Lower Insurance Costs: Renter’s insurance is much lower than homeowner’s insurance. The average cost of renter’s insurance is just $12 per month according to the Independent Insurance Agents and Brokers of America. On the other hand, the average cost of homeowner’s insurance ranges between $25-80 per month. Renters typically don’t think they need renter’s insurance but it would be very wise for them to get it to protect their personal possessions.
These are just a few examples of benefits of renting instead of buying. Of course, there are disadvantages of renting as well but the main point I was trying to make is that there are many reasons why people are choosing to rent more than to buy. As a result of increased demand for rentals, rents are going much higher too. High rents make it very hard for people who decide to buy a home to save for a down payment, so they stay renters longer.
I think it is safe to say that this is a generation of renters.