WSJ : More People Think Renting Is a Better Deal Than Buying

Reproduced from WSJ for forum members

Source: More People Think Renting Is a Better Deal Than Buying - WSJ

More People Think Renting Is a Better Deal Than Buying
Some 76% of millennials said renting is an affordable option, up more than 10 percentage points from a year ago

A growing percentage of renters believe it is cheaper to rent than to buy a home, which helps explain why the homeownership rate remains persistently low nearly a decade after the housing crash.

A boom in apartment construction in the past few years has caused rent increases to begin to level off in many U.S. cities, while home price gains have accelerated over the past year. As a result, roughly 76% of renters in August said they believe renting is more affordable than owning, up from 65% in September 2016, according to survey results from Freddie Mac expected to be released Wednesday.

“We talk virtually every day about how renting is becoming less and less affordable. I think the answer is just that housing is becoming less and less affordable and renting is the more affordable of the two,” said David Brickman, executive vice president and head of Freddie Mac Multifamily.

The data from the Freddie Mac survey and another by the National Multifamily Housing Council and Kingsley Associates suggest there isn’t likely to be a shift toward owning from renting among old and young alike, due to financial reasons and those of lifestyle and preference. Landlords are likely to see this as welcome news that a widespread shift toward owning isn’t coming anytime soon. The data also indicate the persistent shortage of homes for sale on the single-family side is depressing the appetite for homeownership.

In the Freddie Mac survey, the view that renting is more affordable increased significantly across all age groups. Some 76% of millennials said renting is an affordable option, up more than 10 percentage points from a year ago. Roughly 82% of baby boomers said they view renting as a more affordable option, up 11 percentage points from a year ago. And the share of Generation Xers who see renting as more affordable jumped to 75% from 56%.

National home prices increased by 5.9% over the year ending in July, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. Figures for August are due out next Tuesday.

People appear to be aware of how rising home prices are affecting their local markets. Some 58% of respondents for the Freddie Mac survey said they believe home prices are higher than they were a year ago, while 54% said they believe that rents have increased.

The National Multifamily Housing Council survey found that baby boomers might be more likely than millennials to rent to avoid the costs of homeownership, perhaps because they have spent decades repairing broken dishwashers and replacing leaking roofs.

“By the time you hit 65 you’re fed up with all those costs,” said Rick Haughey, vice president of industry technology initiatives at the National Multifamily Housing Council.

The survey found that just 7% of all renters 25 to 34 years old said they choose not to own a home because of the maintenance costs, while 28% of those over 65 years old cited that as the reason.

The top reason renters across all age groups said they prefer to rent was convenience and flexibility, with 23% of respondents citing that as the reason, while 18% said they don’t have enough saved for a down payment. The third most common reason cited was that they had recently moved and are exploring neighborhoods.

That suggests the trend toward renting is being driven less by necessity and more by preference and lifestyle, which means it might not reverse anytime soon.

The Freddie Mac survey found a marked decline in those who said they are actively working toward homeownership, to 14% in August 2017 from 21% in January 2016.

“I don’t see a big demographic shift toward homeownership,” Mr. Brickman said.

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Yes, rent away!!! We landlords need renters… :rofl:

One of my tenants just bought a house and is moving out… time to adjust rent up to market value… :laughing:


Renting is fine, as long as people have the discipline to save and invest. The most important aspects of buying a house are the forced saving and poor liquidity. Unlike stocks it’s a big hassle to sell your house and blow it all off on a fancy vacation.


There is truth to it. In many parts of the US home do not appreciate and there is no upside potential so why bother with home ownership? In the 1960s in San Jose people bought a home lived there for 5 years and made $1+K profit after selling. RE valuation was never a serious consideration toward retirement savings.

Not long ago, I received a call from this Indian fellow he told me why it is way cheaper to rent than to own. He went on and on stating he never paid for water, trash and HOA, all repairs and tax bills are handled by his landlord. He wanted to send me the spreadsheet showing the savings. Before I politely hang up he even stated last 20 years while the landlord raised the rent he stepped up with demand to fix if he was unhappy with the increase. So his landlord has not raised the rent for sometime and tenant getting a good ride. He always pays on time and landlord is OK with that. I think that fellow now has more savings in the bank than many home owners in their 401K.

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For primary, yes.

Currently, renting is cheaper than owning in SV. Unfortunately, 8+ years of bull market means buying now won’t get high return.

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Wow are we really back to the rent vs own debate…I thought that was debunked years ago…Its ok by me …Go ahead and rent…Renters made me rich…Paraphrasing Dean Wormer, we need renters, too…

Obviously he is good enough for the landlord, otherwise, landlord would just up rent slightly above market to force him out. I like tenants to point out maintenance issues as I view them as paid housekeepers, it keeps the house well-maintained… only don’t like those who ask for re-modeling kind (most would willing to pay 50%-50%, some 100%, few irritating ones want free).

Will SS payments be able to cover rent?
Probably not. Good luck.


Renting makes sense only in low appreciation areas, in the BA it is a loser bet, except in rent control areas…Of course tenants want rent control statewide…Could create a permanent renter class and make the current shortage of housing apocalyptic. …While destroying the states economy

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What’s better than renting? Section 8!!! Free money from government paying your rent for you!!! :rofl:

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LOL…Section 8?

It is going to be a loser expectation. Not even the dumb Ben Carson knows how much they reduced the budget on housing.

By the way, I thought some of you were leaving for Texas?:smile:

The article is about millennials thinking renting is better than owning. In their situation might be the right thing to do, new apartment looks trendy, no need to worry about maintenance (just a phone call away), and may be save money to buy house later or just enjoy (why not? would get UBI because of automation :slight_smile: )
However, in SV where only well established family with possibly dual income are going for owning regardless.

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Of course not! It won’t be there at all! The current administration is making cuts to it.

Then, when poor planning, the people think that at retirement, when pulling their precious 401K distributions they will be in 0 tax rate. If a couple earns more than $44K a year their SS will be taxed again.

Those people will apply for senior housing down the road. I heard it’s about $900-$1,100/month currently in the Tenderloin, which is still hefty for someone solely depending on SS.

I think the important question (which is left off) is whether the person can buy a house.

If a billionaire feels like renting, they can do whatever the heck they want. Who am I to tell them how to spend their money? Appreciation is peanuts to them. Freedom and enjoyment come at a price and they can afford it.

If a single mom on WIC says renting is easier, she can move in with parents if she loses her job, I doubt she’ll amass a down payment anyways. Who am I to tell her to own?

It’s the middle class where it matters–people who need to be careful about saving for retirement, and need to be careful that they don’t get gentrified out. I’d say in the rent vs. own debate, the question is “Can you buy a house right now, very easily?” Feel free to rent. But if you don’t have the savings and means to easily buy a house, then you need to own unless you’re changing cities frequently (military/or a job that relocates frequently).

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With the republicans killing the property tax deduction, good luck for all of us.