Will the US become a nation of renters?

An article came up on my linkedin page regarding the US becoming a nation of renters.

www.wsj.com...

"More than three-quarters of Americans now view renting as more affordable than owning a home, the latest sign that rising mortgage rates and higher home prices will continue to pressure home sales."

Maybe i'm out of touch, but I don't think this is necessarily true. Rents seem pretty high out there too. When mortgage rates go up, there is only one direction for home prices to go, down. It may take a while but it will happen. Is this really about mortgages or wages and other costs of living?
I've always thought that one huge aspect of the American dream was to "own" your own house. Is this dream no longer a reality for most, or is it that our priorities have changed?


www.biggerpockets.com...

"As many as 80% of human jobs could be made redundant in the next few years."

Holy cow, if that's true, I don't think it is going to be just housing we have to worry about!!

a reply to: JAGStorm

I bought my house few years back. Took me 3 years to pay it off. I will never go back to renting. I have over $8k in my savings now. Was around 25-50 in savings when I was renting. Saving close to 5k a year just paying taxes vs renting. Best thing I ever did.

I think it would depend on where you are looking to buy when it comes to a home. So many look at McMansion-style new homes instead of smaller, older ones or ones in small town locations.

Also, if you think this is bad, then why does everyone salivate at the prospect of becoming a nation who simply temporarily rents an electric car for every car trip you need to take which is becoming a popular theory? That one seems to be socially acceptable to most.

Well you have to look at taxes. In my state property tax alone in nearly 2.5%. So the average house is 250,000 that makes yearly prop tax nearly $6,300 or ~$500 a month. That makes a huge difference especially if your home value goes up.

I have met people who prefer living in their vehicle to actually renting a home. if that tells you anything.

Have you heard of Property Taxes? We're already a Nation of Renters.

But on a more serious note, that many Americans believe renting is more affordable than owning, because...... well...... They're stupid. We have Americans that believe chocolate milk comes from brown cows, the government offers free stuff and that believe buying a 900 square foot, 1 bedroom condo on the top floor of a 47-floor highrise for $900,000 is a perfectly reasonable price.

I have a 4 bedroom, 3 bathroom, 2 floor and 2300 square foot home on half an acre...... for $1100 per month. For that same price, I can get a 3 bed, 1 bathroom apartment with more rules than a courthouse, no yard, neighbors you can hear through the walls (and ceiling) no resale value, no driveway and the joy of being treated like a second-class citizen.

originally posted by: ketsuko
I think it would depend on where you are looking to buy when it comes to a home. So many look at McMansion-style new homes instead of smaller, older ones or ones in small town locations.

Also, if you think this is bad, then why does everyone salivate at the prospect of becoming a nation who simply temporarily rents an electric car for every car trip you need to take which is becoming a popular theory? That one seems to be socially acceptable to most.

The difference is that rental rates can keep going up and you HAVE to pay it or get kicked out. That's the major benefit of owning a home, stable cost of housing. That is of course unless you get suckered into an adjustable rate mortgage.

With vehicles, we can adapt to alternate methods easier if prices shoot up.

a reply to: avgguy

Landlords have to pay property taxes too, which is going to be factored into rental prices.

a reply to: JAGStorm

I've always thought that one huge aspect of the American dream was to "own" your own house. Is this dream no longer a reality for most, or is it that our priorities have changed?

The dream is indeed no longer a reality for most because home builders aren't building starter homes; they're only building upscale spec housing. I have a lot of friends in then nearest major Metro area and home buying has become an absolute nightmare for them. They all bought about 20~30 years ago...way over paid and can't sell their homes and are locked into neighborhoods wrecked by becoming largely rental/section 8 neighborhoods. That's why you have the "Ugg Buys Ugly Homes" type buyers who will buy older homes at a 50% discount from appraised value with cash so you can escape the declining neighborhood before you're killed in a drive-by.

From what I'm seeing, the new American Dream/Nightmare is to buy an RV and live in it and move it around from one place to the other where ever the job is. In California they actually sell/rent parking spaces around abandoned malls where you can park your RV.

I've worked in mortgage industry for 15 years...

People still want to buy. However, I think they are more cognizant about what stage they are in life.

Buying a home is a LONG TERM commitment. Generally, people buy when they are getting married, having kids, set in their careers, and don't want to leave their city. The transaction costs of buying and selling are high (taxes, realtors, etc). As such, you could lose money (a lot of money) if you buy and then need to sell shortly thereafter.

On the other, hand renting is easier. You can pick up and leave if you need to relocate. For many people, this makes more sense, especially for people who are not yet settled. In addition, the difference between a rental and owning is not as great. It used to be when you rented a place, it looked like a rental. Now some apartments are nicer than condos.

Renting is more expensive in every case.
But people really need to buy what they can afford and not a grey-eige mcmansion.

originally posted by: TonyS
a reply to: JAGStorm

I've always thought that one huge aspect of the American dream was to "own" your own house. Is this dream no longer a reality for most, or is it that our priorities have changed?

The dream is indeed no longer a reality for most because home builders aren't building starter homes; they're only building upscale spec housing. I have a lot of friends in then nearest major Metro area and home buying has become an absolute nightmare for them. They all bought about 20~30 years ago...way over paid and can't sell their homes and are locked into neighborhoods wrecked by becoming largely rental/section 8 neighborhoods. That's why you have the "Ugg Buys Ugly Homes" type buyers who will buy older homes at a 50% discount from appraised value with cash so you can escape the declining neighborhood before you're killed in a drive-by.

From what I'm seeing, the new American Dream/Nightmare is to buy an RV and live in it and move it around from one place to the other where ever the job is. In California they actually sell/rent parking spaces around abandoned malls where you can park your RV.

Zoning laws and other regulations have made building affordable homes next to impossible, especially in large metro areas.

originally posted by: avgguy
Well you have to look at taxes. In my state property tax alone in nearly 2.5%. So the average house is 250,000 that makes yearly prop tax nearly $6,300 or ~$500 a month. That makes a huge difference especially if your home value goes up.

Depends on the state. of course.

Also what laws you can play with.

For instance, I have a little under 400 acres with two (now) homes on it.

In Montana if your home is incomplete or not on a permanent foundation then it isn't considered a home, but an outbuilding.

So our first home will never be on a permanent foundation and my second home will never be completed.

My property taxes are roughly $680 a year, but a portion of my property I have turned into a tree farm which gives me a tax credit.

I mow a section of the property and it is now zoned as an emergency plane landing site, giving me a tax credit.

So my actual taxes, after everything, is roughly $200 a year.

Which I pay by doing an occasional odd job, to be honest.

With a thousand feet or so of riverfront property.

a reply to: Lumenari

There is a really stupid property tax law here

If you build a deck with wood it is taxed, (wood is considered living space even if it isn't) but if you use concrete or pavers it isn't. A lot of people don't know that.

BTW I am totally and madly jealous of your property taxes and acreage, and the little tip about the plane landing.

originally posted by: Edumakated

originally posted by: TonyS
a reply to: JAGStorm

I've always thought that one huge aspect of the American dream was to "own" your own house. Is this dream no longer a reality for most, or is it that our priorities have changed?

The dream is indeed no longer a reality for most because home builders aren't building starter homes; they're only building upscale spec housing. I have a lot of friends in then nearest major Metro area and home buying has become an absolute nightmare for them. They all bought about 20~30 years ago...way over paid and can't sell their homes and are locked into neighborhoods wrecked by becoming largely rental/section 8 neighborhoods. That's why you have the "Ugg Buys Ugly Homes" type buyers who will buy older homes at a 50% discount from appraised value with cash so you can escape the declining neighborhood before you're killed in a drive-by.

From what I'm seeing, the new American Dream/Nightmare is to buy an RV and live in it and move it around from one place to the other where ever the job is. In California they actually sell/rent parking spaces around abandoned malls where you can park your RV.

Zoning laws and other regulations have made building affordable homes next to impossible, especially in large metro areas.

The scary thing is I bet you paid less than I did for my 1800 sqft home in Chicago on a 1/10 th acre. My property taxes will be $14,000 this year...


This was in response to Lumenari... somehow, I responded to myself.

a reply to: JAGStorm

property "ownership" is an illusion. If you actually own something, then it can't be taken from you for failure to pay an arbitrary tax or fee someone who has zero legitimate claim to the property levies on you. If you actually own something, then things like building an improvement , painting what you own, or even deciding to park a few cars on blocks on your own property would be nobody's business but your own. If you actually owned something, then all decisions surrounding your own property would be yours and yours alone.

Ownership in the USA is largely a sham.

a reply to: Edumakated

So true, particularly from what I read, in California and the rest of the West Coast.

What a horrible, sad situation they're creating for themselves there. And with the disease ridden homeless population ballooning in size, they may well next be facing a health emergency.

a reply to: Edumakated

Exactly why I left Illinois!

Most people think ohhhh 14K property taxes must = mansion... little do they know.

I have a family member still in IL that lives in a modular home, on a small corner lot in a bad bad area, her property taxes there are just under 7K! (and that is with a senior discount)!!!

a reply to: TonyS

“The dream is indeed no longer a reality for most because home builders aren't building starter homes; they're only building upscale spec housing.”


Now if that doesn’t sound like a niche market just begging to be developed I don’t know what is!

If you’re not interested in “Tiny Home”-fad shoebox living and can’t or won’t afford a “McMansion”, you could be just the customer for what they used to call a “honeymoon cottage” starter home.

Just the thing for urban “in-fill”, or even a revisualization of the the village/neighborhood concept.

a reply to: Edumakated

Retired realtor here. Used to be people bought and sold every 5-7 years. After all the financial fallout, that changed.

There are more renters today. It depends on alot of factors whether people buy or rent. Situations differ. I love the flexibiity of renting; not the moving though.

Families like to stay put. Younger and older like flexibility.