Not so long ago, renting was generally for young folks or lower income folks, people who couldn’t afford to buy a home. Especially with inflation and hiked up interest rates, a lot of people who wanted to buy a home couldn’t afford to. Buuuuut…they’re not the only ones!
According to the Wall Street Journal, that whole dynamic is now changing, and more people are deciding that renting a home is the way to go even if they can afford to buy. It’s the Rise of the Forever Renter!
How strong is this trend and what does it mean for the bigger market? We’ve got the dish.
Here are Five Fast Facts on forever renting:
- 📈 How Many Are There? - There were almost 103 million people living in rented housing in 2022, which is a 15% increase over 2007. Only about 64% of Americans are homeowners, compared to 89% in China. Not sure why we’re comparing China to this, but whatever…
- 💰 Income Levels Up - One rental manager with about 50k units in 30 different markets said nearly a quarter of its residents earns over $200k per year. Renter households with an income over $1 million hit a record high of almost 4,500 in 2022, over four times more than just five years earlier.
- 😎 Motivations - There are a lot of reasons people choose to rent. Some of the most common are that you can live in a bigger/nicer house by renting than if you were to buy, you get the perks of homeownership (space, garages, etc.) without the burdens (mowing the lawn, maintenance, and so on), and that it’s a lifestyle choice that allows more flexibility to move much more easily. Just make sure you don’t anger the landlord, or you could find yourself on the street very quickly!
- 🏘️ Designed For It - New subdivisions are popping up all over the country to meet this trend - they’re called build-to-rent communities. They look just like normal neighborhoods but all the homes are rented instead of purchased. They often fill up quickly, and the rate of re-signed leases is almost 100%.
- 🤔 The Big Picture - It may seem like no big deal, but there are huge implications if this trend continues. For one thing, there’s a shortage of low-cost rentals (the number of units is down 23% over the last decade), which is a massive problem for lower income folks. Renters also can’t take advantage of tax breaks that homeowners get, so forever renters will need to do some different things to prepare for retirement since they won’t have that paid off home - typical investments won’t be enough. There are also impacts to construction and renovators, as well as products that are easily moved from one rental to the next.
🔥Bottom line: This is an interesting trend. It is already having a major impact on renters, obviously, but it’s also starting to spill over into related industries, too. Where it goes – or ends up – is impossible to tell right now, but it’s certainly something to keep an eye on since it seems likely to have a big impact on your Paychecks one way or another.
Do you know any forever renters?
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