Why do people continue to Rent?

  • November 30 2010 - Staten Island
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Answers (58)

Profile picture for rvessells
Duh!
  • November 30 2010
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Profile picture for Dunes....
Once upon a time many many people bought Homes because they believed Prices would always go up, they'd get instant equity to borrow against, they'd be able to sell before the ARM kicked in and if worse came to worse then they'd at least be able to break even..
These people were told by a number of so-called RE "experts" all the above was true and Rates were lower than ever before and inventory was larger than ever before and buying was an investment and why rent if you can....

Now many many people don't believe that..They believe something else now
  • November 30 2010
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Profile picture for the_country_hick
You could either buy a house for $3,600 a month or rent for $1,200 a month. Which makes the most economic sense?

Besides, buying now would mean buying a huge problem as prices drop more and needing to sell later would lose a massive amount of real money for those who chose not to rent..
  • November 30 2010
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Charles,

Check out a recent article on msnbc.com "10 U.S. cities where renting rules", NYC came in number #1: http://www.msnbc.msn.com/id/40155670/ns/business-real_estate

I'm still of the school of thought that if you have the down-payment and can keep your total net monthly carrying costs as close as possible to what the rent would be for a comparable apartment then it makes more sense to own. (Net would be after applicable Tax Deductions for mortgage interest and maintenance etc.). Add to that you are gradually building equity over the long-term.

  • November 30 2010
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Profile picture for sunnyview
In some communities, it makes much more sense to rent. Many large cities are like that since the cost of owning can far exceed the cost of renting a comparable property. If the market is still falling, then buying can be all risk with no reward since there is no offset with potential gains in real estate value. 

There is no shame in renting and the more expensive it is to own in a community, the more people choose to rent long term.
  • November 30 2010
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Profile picture for the_country_hick
On a different note.

Some people have desired to buy. But they realize that if they did buy and some maintenance came up they could not afford to fix the house.

Some people bought a house at $1.25 a gallon gas and heating oil under that. They now see gas around $3.00 a gallon and heating oil higher. If they were a bit tight in their finances to begin with the increase in energy costs (Should I mention food costs increased also?) they are having problems meeting their mortgage each month.

Those of us who did not buy to much and saw those who did ended up suffering from increased costs with incomes that either shrunk or did not increase are thinking "WHAT IF?"

It already has happened and could again. What seems bad now could get far worse. A Marginal buyer could be a sad statistic tomorrow.

So todays buyer (or fence sitter) is looking at this with one hand on their wallet and the other hand doing a reality (is that realty?) check.
  • November 30 2010
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Profile picture for sunnyview
Really good points. 
  • November 30 2010
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Profile picture for real estate mike
disappearing equity, friends who got throw out(foreclosed on), simple abundance of foreclosures drains confidence, bad economic conditions, renting is usually easier, job insecurity( coworkers got laid off, or pay cuts),...I'm not sure how long you wanted this list to be but I regress.
  • November 30 2010
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Because they don't want to make the commitment. 

  • November 30 2010
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Profile picture for mckylie
Millions of reasons!  Don't have enough money saved up for a downpayment, can't qualify for a loan at this time, Can't afford a mortgage, insurance and taxes, rental prices may be lower than mortgage in their area, don't want to be locked to a mortgage with this unstable economy incase they get laid off like millions of others, relocated to a new city/state and aren't sure what area of town they want to be settled down in for the long run.........
  • December 01 2010
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Profile picture for jadedea
im actually trying to buy because renting is too expensive. the landlord has increased my rent after a few situation where i couldnt pay rent on time (who does that anyway??? they keep paying rent late, lemme make rent higher). anyways for a YEAR i looked for houses that i could rent, even apartments (which i loathe to death for many reasons) and the prices are 300-400 inflated and way above my pay. i also have a fully furnished house. so i thought id just stick my furniture in storage, rent that 800 sqft basement and live like that for a while. storage can cost me 1700 or more a month. its like paying two rents!! i also have pets and nobody likes cats for some reason, theyll take the dog peeing all over the place vs a cat. so in the en, buying is cheaper than renting!
  • December 01 2010
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Many reasons why people continue to rent. They can't qualify for a home loan. They have no money for the down payment. They think they are going to be relocating soon. Or just they have not tried to qualify for a loan and they assume that they can't get one. I like helping people qualify for a home loan if they are ready to be homeowners.
  • December 01 2010
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Profile picture for rockinblu
I made this post over two years ago, and my view on our situation in regards to renting vs buying since that time has only been reinforced.

Am I sorry that I was a house owner for 46 years of my life? Not at all, but there comes a time when enough, is enough. Just a very few of my trials and tribulations of house ownership for 46 years are mentioned in the thread I linked to.

As I think I stated somewhere in that thread, just not having to deal with contractors and repairmen, is worth whatever we're losing financially in rent over and above the savings on RE taxes, maintenance, HOA, loss of house value in a declining market, and investment gains from proceeds from sale of the house. Wait a minute!! I think we might be coming out ahead on the deal, but if not, who cares? You can't put a price on happiness, and I'm infinitely happier now than I ever was as a house owner. Even Mrs. Rockinblu doesn't have any interest in owning again.
  • December 01 2010
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Profile picture for blank screen EXILED
The % renters is still down from a decade ago.  Bad federal government Housing and Lending policy put people into ownership that should never have been.  The government's attempt to make everyone "owners" to pay for and maintain their own property based on NAR lobbying was a complete failure.  From a local community perspective, the only reason to attempt such a thing in the first place was to prevent gentrification from forcing low income families out of their long term location and house.  But of course such policies didn't help them at all, as it just drove prices up quicker and forced them out of their (rental) home quicker.

The only reason to own is to own outright (no mortgage) and to have all the skills, resources, health and energy to do any of the repairs and maintenance yourself as it gives such a household more flexibility and security.

Otherwise, renting gives one much more flexibility and there isn't the concern about the 16% transaction costs for selling and buying again.

A house is only a hedge against inflation when there is inflation in the housing sector.  When there is deflation in the housing sector, such a purchase works against the buyer.  Those that own outright that don't have a need to move can put up with the loss of imaginary equity, even though they still don't enjoy that paper loss.
  • December 01 2010
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Profile picture for SoCal Engr
For those who are capable of buying, but choose to rent...

They have seen how hard it is to sell in this market, and have no desire to make the commitment, either because they need the flexibility for their careers or because they don't trust the stability of their current employment.

They believe that their local market has not bottomed, and they have time on their side.

Their distrust of the RE pundits (you know, the one's who said "Now is the time to buy!") and the reported economy/market conditions have paralyzed them.
  • December 01 2010
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Profile picture for Connie Klemme
a few years ago I would have said there's never a good reason to continue to rent but since then I've met a few people that renting just works better for them.  Homeownership is a big responsibility, taking care of your home and yard and all that comes with that is work.  It's work most of us want because we want to call it "mine" and we want to reach that day of no payments.  A few years ago I had an older lady put her house up for sale- she had no mortgage.  The house needed some repairs and it was too much for her.  I tried to suggest she buy a condo- but she chose to rent.  She wanted to have someone else be responsible for inside and outside repairs and she wanted her cash to travel the world.  She also wanted to be able to move in 6 to 8 months for no reason other than to try a new part of town.  I thought she'd lost her mind but it works for her.  So there is no right or wrong way to do it...there is what works for you! Some people just need to rent, some need to buy.
  • December 06 2010
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Profile picture for blank screen EXILED
A better question is "why do Realtors continue to try to earn a living off of commissions for housing unit sales"?

With the "free money" being given away in the industry from 2002 through 2005, the industry is well over saturated.

There are much better industries to be in for most of these used pad sales-people, especially when they have nothing better to do but ask questions that have obvious answers.
  • December 06 2010
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Profile picture for JDERP

A different way to look at it is.. right now under the current market conditions it's a lot tougher to get approved for a loan to purchase a home. Rental activity has increased significantly over the last 2+ years.

  • December 06 2010
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There are many reasons why people continue to rent (this coming from someone who has been a long time renter, but is currently in the process of buying a home.)  Home ownership involves a lot of responsibility and commitment, of which some people simply don't want to deal with.  The ease of calling a landlord to fix a leaky faucet may outweigh having to go to your local store and fixing the problem yourself.  Along the lines of wanting to minimize your responsibilities, some people simply don't know where they will be from one year to the next and buying an illiquid asset is not the prudent thing to do.  There are many more reasons, but the main one has to do with having the financial capability to own a home.  Given the large amount of distressed sales, people are forced into renting and will have to hold off on purchasing a home for a while.  Others may not have the capital built up to put a down payment on a place.  Or worse yet, there are those who would like to buy, but can't get funding.  A prime example of this problem exists with my client who has net assets exceeding one million, and a credit score of 800.  This client is self employed and willing to put 50% down, yet can't get a single penny financed.  Thus, the loose lending standards that allowed renters to buy is now preventing some renters from buying. 
Given all this, I honestly believe the timing is right to buy (of course, you have to evaluate your own circumstances).  The cost of financing (assuming you can get it) is near historical lows, inventory is plentiful (leading to lots of options) and prices are down significantly in most areas (and the buying affordability index supports this.) 
The bottom line is renting may be appropriate for some or may be their only choice.  However, I am convinced that opportunities abound for those looking to buy!
  • December 06 2010
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Profile picture for blank screen EXILED
If you can rent for $100 per month for 6500 square feet, including all utilities, I have no idea why ANYONE would buy 1500 sqft for $8000 per month, plus all the other expenses like HOA fees.  Especially when the neighborhood for the $8k per month ownership unit is much worse than the neighborhood for the $0.1k rental.
  • December 06 2010
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Let's not forget: if you can't get a loan you can't buy a house. Renting may be your nly option if you have any hits on your credit report or if your employment is precarious.
  • January 13 2011
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prices dropped in all 20 metros last month... I think that should answer the "why are people renting..." type of questions pretty well...
  • January 13 2011
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Profile picture for Lady Chattel
Why does a REA always have to resort to "can't get a loan" then you have to rent......has it ever occurred to you that a reasonable person could do functional math and determine that the more economic choice was renting.  I could buy several homes if I wanted to right now, but I CHOOSE not to. 
People meet me and my family and they are completely taken back that we ***gasp*** rent our house.  I guess we don't fit some preconceived notion of what a renter should be like. 

What I find truly amazing.....after 3.5 yrs of renting, no REA or home price has made the case of buying verses me continuing to rent.  Why would I spend up to $1K more a month to buy the same home I rent???  The home down the street listed for $518K is nice.......but not when I rent a similar home for the equivalent of financing a $300K house........reality is that the homes in my neighborhood should be in the mid $300s.....but will the prices revert to the mean......REAs, Banks, etc will do everything to keep that from happening......if so, then don't whine when no one wants to buy what your selling.
  • January 14 2011
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Some people do not know the figures regarding monthly payments for a mortgage, tax, insurance, sanitation....
In fact, when I speak with people who rent and tell them that it would be cheaper for them to own and when I show them the numbers, some are completely surprised, like its been the best kept secret.
Furthermore, I show them that if they bought a double, live in one unit and rent the other, not only would they live for free, depending on the rental income and the monthly mortgage, they can even get a positive cash flow.
  • January 17 2011
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I live and sell in a secondary home market - none other than The Jersey Shore.  Many buyers believe that the market will continue to go down, but more importantly, it seems that a lot of buyers are having difficulty securing mortgages.   Several years ago, banks were giving money away.  Today, it's a minimum 20% down, and one's credit has to be impeccable.   For a lot of buyers - that combination is leading them to the decision that renting is the best option for now.
  • January 17 2011
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Profile picture for SteadyState
Because in the area of interest to us:
Average monthly rental (2000-2200 sq-ft): $4000-$4300
Cost for same home: $1,300,000 - $1,500,000.
Just the property tax on the home purchase is $15K-$20K
Commission/Closing costs would be: $130K - $150K (you can live 3 years in your rental just from avoiding the commission/closing costs)
We sold our home in 2005 in the same area when we felt the market was overbought. We are happy renting and glad we did not get swayed by the "buy now before property prices go higher" propaganda in 2005. At that time the same homes (circa 2006) were priced at $1,500,000 - $1,750,000.
Does that answer the question of why we rent instead of buy?
  • January 17 2011
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It is important to realize that all real estate is local.  There are different markets and sub-markets. Therefore, it stands to reason that renting a home may be the best idea in some areas other than others.  Also, if a person has credit deficiencies, renting is the better option until he/she has the credit score and downpayment to qualify.  There are many reasons why people prefer renting to buying.

There is definitely a considerable difference between renting and owning a home.  Many first time homebuyers do not realize the "true" costs associated with owning a home.  Renting a home could give that insight.  For others, there is no desire to ever own a home.

  • January 23 2011
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Yes, believe it or not, there are people like that in this world!  Personally, I believe that owning real estate is the only true way to build wealth in this country.  Building equity over a period of time is more advantageous than playing the stock market, and safer than buying bonds.  It really is the American Dream.



There are people out there, however, that feel a sense of security when they have no attachments.  I respect that, I really do.  What those people don't see, unfortunately, is that real estate, like anything else, is cyclical.  Obviously we have had some very lean years in the past 5 or so years.  The national news paints a grim picture, and people are scared by that.  But as it has since the beginning, home values will increase again.  I'm from the DC area and I missed the first real estate boom in the early 2000's.  I can tell you that I won't be on the outside looking in this time, and I really think we're closer than a lot of people think.



If you have any cash and the ability to buy right now, this is the absolute perfect time to buy.  Between all the foreclosures, low low rates and the slumping job market, there will be a lot of millionaires made in 2011, and I hope you are one of them!
  • January 29 2011
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  • January 29 2011
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Profile picture for Lady Chattel
Nice link Linda.......and it goes back to FUNDAMENTALS......the ratio is a good indication of whether properties are priced correctly....or rather they are priced TO INCOMES.   For far too long home buying was pushed at an cost and now look at the mess from that.  The duping still continues.  If more people dumped their overpriced nooses and were able to bank that money it would infuse much more money into the economy.......when all that money in overpriced mortgages goes directly to the banker without stopping anywhere else then our economy starts to crumble...much like it is now.  Propping up prices benefits few.......


I can afford to buy a home at the inflated prices......and yet I continue to rent cause I am not the greater fool.....
  • February 01 2011
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