Renting vs. Buying: Why People Choose to Rent

Renting, especially in urban areas, is becoming more of the norm, with homeownership taking the back seat for many. In fact, a recent NYU study found that, in 9 of the 11 major metro areas, renters made up the majority of the residents. This increased trend in renting begs the question: what are the benefits of renting versus buying a home? Read on to see what has so many city-dwellers and suburbanites renting and leaving homeownership behind.

No Down Payment

Renters might have to provide a security deposit up front, but homeowners must offer a down payment, which can be upwards of 15% of the home’s price tag, or thousands of dollars. Saving up for the down payment could take months to years, depending on your budgeting, and a security deposit is typically just an extra month’s rent. Plus, renters usually get their full security deposit back once they move out of the unit, while homeowners have no guarantee that they will ever see a profit from their purchase. If you’re not ready to stick to a hard budget and start doing some serious saving for a down payment, renting is the better option.

Lower Expenses

Alright, this one may sound pretty obvious, but there’s more to consider than just the actual cost of buying a home. Think of all the things renters don’t have to factor into their annual budget: homeowners insurance, property taxes, loan payments and their associated interests, and, of course, all utilities, appliances, and maintenance associated with the house. These costs can add up and really make homeownership an expensive investment.

Property taxes can cost anywhere from $900 to more than $8,000 annually, and utilities and maintenance are completely up to the homeowner to pay. New appliances, indoor and outdoor renovations, and general upkeep all have a price, and it’s the homeowner’s responsibility to pay for them. Mortgages, or loans, can have extremely high interest rates, and homeowners are often stuck paying off their mortgages for upwards of 15 years. In addition, Homeowner Association (HOA) Fees can be costly and required of many residents. Aside from normal utility payments, renting requires none of these additional fees.

Moving Flexibility

Considering a career change that may require a move? Just getting your feet on the ground in a new city? Renting is, by far, the best way to ensure that you have the freedom to move cities, states, and even countries if, and when, needed. Homeowners are faced with the added challenge of selling a home. This can take a good amount of time and planning, and if you’re in a hurry to get out of town, you’ll be caught in the middle of that lengthy process. Plus, most experts recommend that, if buying a house, you should stay in it for at least 5 years to avoid any financial hits.

Unexpected life events like death in the family or being laid-off can affect incomes, too; being a renter allows you the freedom to attend to those emergencies without the stress or worry of whether or not you can make the house payment or afford the fees associated with being a homeowner. So, if you’re planning on moving around, not sure if the city or town is the right fit, or simply want to be able to up and move on a whim, renting is the option for you.

Renting Allows for Other Investments

Homeownership is seen by many as a huge personal investment, but there are plenty of other types of investments that can have big payoffs, as well. Investing in things like stocks, bitcoin, and small businesses can lead to large profits, whereas a home can depreciate over time and money can be lost. Renting allows you to spread your funds out over different types of investments instead of tieing all of your money up in one single purchase. Plus, as a renter, you won’t have to worry about your home or apartment depreciating due to factors like crime, unemployment rates, and new housing developments.

Millennials and Renting

It’s no surprise that a significant percentage of millennials are renting instead of buying. In fact, millennial homeownership is dropping at a faster rate than any other group, which, in large part, can be attributed to record high student loan debt. Many millennials are putting off buying a home and, instead, are opting to spend their extra money on travel and dining out.

The benefits of renting rather than buying a home are plentiful, and many factors should be considered when making the decision. If you’re ready to join the trend and rent, be sure to look through our apartment listings and choose the right city for you.