Will Anybody Buy a Home Anymore?

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.

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  1. Mark May 20, 2015 at 6:55 pm Reply

    I just stumbled across this blog and I agree with some of what you are describing, however I have the perspective of someone who has been a renter for many years and has also been a home owner for many years as well and I thought I’d add a few thoughts.

    Renting is definitely easier almost all around. While it’s more expensive than buying, upkeep is not the renter’s responsibility, the renter has the flexibility to easily move with relatively short notice, and as you pointed out a renter is not likely to get into debt paying rent.

    The flip side is that with home ownership you will nearly always get your money back out of it again once you sell, provided you didn’t buy your home in a declining neighborhood, you maintained or improved your home, and you didn’t buy a home near the top of the market (i.e., buying a house that costs more than most of the houses in your area). I’m a resident of Iowa and I’ve owned and sold homes in Iowa (even during the peak of the recent recession in 2008-2009) and even though I haven’t always gotten the price I’d like out of them, I’ve been able to at least recoup the money I put into them.

    There’s certainly a trade-off between renting and owning. When owning, you have much more control over where you live and the appearance of your residence. You also don’t deal with shared walls and noisy neighbors slamming doors in the hallways at all hours and some of the annoyances that you deal with in an apartment building. And even when comparing renting a home versus buying a home, with home ownership you still have the advantage of being able to sell it when you leave and get most or all of your money back out of it and maybe even make a profit. Signing a 15-year or a 30-year loan doesn’t mean you have to live there that long. That just reflects how aggressively you choose to pay the principal and build equity while you’re there.

    Another benefit to home ownership are the tax breaks you receive for owning and improving a home. Some of the home improvement tax rebates (insulating the home, adding energy efficient windows, new furnace, etc.) can actually cover most of the cost of home improvement, making it much easier to sell the house later on.

    In the end, it really is a matter of what suits the individual. Home ownership offers privacy, the freedom to do whatever you want with your dwelling, a private yard with space to be outside by yourself, and it can be a good investment. Renting offers flexibility, less upkeep, and a renter is less likely to end up in debt.

    Now I’ve hijacked your comments with a mini post of my own, haha! Anyways, keep posting and good luck.

    • Nick Kljaic May 21, 2015 at 4:34 pm Reply

      Hi Mark. Everything you said is true, there are pros and cons to both buying a home and renting it. What fascinates me is that people are more short-term oriented these days, which leads to increase in apartment rentals. Nobody even wants to go through the hassle of getting a loan and purchasing a home…it’s much easier just to rent it. Every major city in the U.S. is dominated by renters. (http://www.wsj.com/articles/renters-are-majority-in-big-u-s-cities-1423432009). For example, 64% of people in NYC rent their homes although, when we do the math, it would be much cheaper for them to buy their homes (but only if they stay there for long-term). So, if financially it makes more sense to buy rather than rent, why is the demand for rentals increasing at a tremendous pace? There are many reasons…

      I believe the change from buying to renting is mostly because of job uncertainty and people are just not willing to settle down on one place. Nowadays, nobody wants to get locked in a mortgage for 15-30 years because they don’t know what can happen next month, let alone 15 years. On the other hand, people who buy properties, mostly buy them as an investment, so they could rent them out and collect rent every month.


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