Rent or own? Increasingly Americans opt for rental homes.
Homeownership is supposed to be better for neighborhoods and children than renting a home. But the rent or own debate is not so clear-cut?
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"Lots of people rent because they can't afford to buy, but that doesn't mean that they aren't responsible members of their community," he says. "What really matters is whether they think of themselves as stakeholders. What determines whether you think of yourself as a stakeholder is how long you plan on staying. If you are there for the long haul, you're a stakeholder. If you're transient, you're less so."Skip to next paragraph
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Real estate speculation and house flipping, while technically homeownership, did little to contribute to community building, he adds. Conversely, "long haul" renting is an everyday occurrence in cities like Manhattan, which is very stable.
Owning a home has also long been touted as a contributing factor to the development of healthier, smarter children. Not so, says research gathered by the Center for Housing Policy in Washington, D.C., which suggests it's the role of parents, not real estate, that determines childhood outcomes.
"Earlier research suggested homeownership led to better health outcomes, educational outcomes, and fewer problematic behaviors," says Maya Brennan, a senior research associate at the center. "But as we've studied it further it's [traits] like having a high motivational level, a desire for consistency and stability, and a determination to set and achieve goals that are responsible. Moving to renting isn't going to change those characteristics in people."
In fact, affordable rental housing could play a role in cleaning up communities blighted by foreclosures, says Christopher Herbert, director of research at the Joint Center for Housing Studies. The center's new study notes that the pace of conversions of homes from owned to rented tripled between the 2001-03 period and the 2005-07 period, then it nearly doubled again in 2007-09 to 1.9 million units, with single-family homes leading the way.
The threat to the stability of rental communities isn't renters themselves, but quickly escalating rent and utility prices, which have outpaced wages, according to the study. Though this has long been a challenge for low-income earners, it's hitting moderate-income workers now, too. Currently, 1 in 4 renters (10.1 million households) spends more than half their income on rent and utilities.
And rents are rising, up in 75 of the 82 markets tracked by Rent.com, in Santa Monica, Calif. Just about everyone rents at some point in their life. Though some are choosing (or are being forced) to rent for longer, for most it's a steppingstone to buying.
"When you choose a home, you don't just choose a home – you choose schools for your children, you choose public safety, you choose access to jobs … all of those pieces that are rungs on the ladder to opportunity in this country," said Shaun Donovan, secretary of the US Department of Housing and Urban Development, in a speech in April. "We must continue to make the case that rental housing is a fundamental building block of opportunity and prosperity in this country."