Countless stories out there espouse the opposite. Home ownership is part of the American Dream. It’s a rite of passage. Yeah, maybe when the American worker was able to climb the ranks of a single company, with job security and a pension. Unfortunately, that is just not the case anymore. The economy is volatile. Lay-offs followed by bouts of unemployment are a way of life. Nothing is as steady anymore, so it’s difficult to make your residence be that way.
Yes, a recent study showed that in America’s major cities, owning was 35% cheaper than renting. However, that is down from 45% a year ago. The gap between renting and owning costs is shrinking, and with it, the biggest advantage of home ownership. At Jason Cohen Pittsburgh, we’re a lot like other multifamily investors — we don’t promote renting as strongly as proponents of home ownership plug their view. But renting has become quite appealing in today’s economy.
For the Young
The young generation is taking longer to settle down. They switch jobs more frequently. It’s more difficult to tie them down. That even applies to your daily time. If you never want to spend a weekend cleaning grout, or spackling, or re-staining a deck, you may be better off renting. The property manager will pay someone to do those things while you’re camping, or studying, or working. It won’t be your hours spent on home repair.
For the Unstable Job Market
If you don’t know where you’ll be in five years, it’s best to not have a house answer that question for you. Worried you may have to relocate for your career? Maybe renting is the way to go. Industries bubble and burst — the next big thing may be nothing soon, and you may have to move to find something else.
For the Commitment Phobes
Buying that home is pretty close to permanent. You better like the schools, the neighbors, that dog that barks at the moon every night — you’ll be there for a while. If you’re sick of the neighborhood or the people or anything else, you usually have only a matter of months before you can move out. Renting enables you to test different neighborhoods and living spaces to test what you like. You could try a split house in the suburbs or a high-rise in the city — figure out what you prefer before you make the investment.
For Retirees
Enjoy your retirement. You’ve earned it. Spend it relaxing, vacationing, exploring those interests that a 40-hour work week made impossible all those years. Unless you enjoy mowing the lawn, re-caulking the bathtub, and searching for contractors to repair the larger problems, renting may be a much less stressful way to enjoy retirement.
Outside of changing your light bulbs, while renting, you’re not only paying for living space but also for a team of professionals to jump at your every maintenance request.
Renting is kind of like having insurance. Sure, you’re paying extra each month, but that covers something that does break. As a homeowner, when something breaks, you have to fix or replace it with expenses out of pocket. When you own your home, you must manually put money aside to cover expenses as they arise. When you rent, it’s covered in your monthly payment. However, you do run the risk of putting the repairs into someone else’s hands. Just make sure you rent from a reputable company that is on top of things.
Jason Cohen (Pittsburgh) 