Have the means, but lack the desire to purchase a home? There are a lot of reasons why renting is better for some people, and why you might want to choose renting as a lifestyle option.
Throughout the years, studies have indicated that those that own their home typically have a higher income and level of financial stability than those that rent; however, in the past decade, this has changed.
In 2008, there were a total of 3.8 million high-income households electing to rent. By the year 2017, this increased to a total of 5.7 million. These days it’s common to find families earning six-figure incomes renting vs buying.
Population growth has only grown a total of 6% and income levels have grown only 7%; however, renters that have high incomes has grown a total of 48% – and growth is expected to continue. If you have the means to buy your own home but simply lack the desire to engage in the process, you, too, could become what is known as a “lifestyle renter”.
Why Do High Earners Choose to Rent, Instead of Buy?
It is commonplace for individuals to have a desire to obtain a job doing something that they love, make a high amount of money doing it, and purchase big-ticket items, such as a vehicle and a home. Why, seemingly all of a sudden, are those that have the financial means to buy choosing to rent?
Many simply do not want to be burdened by long-term mortgages. Then, there are those that simply do not want the responsibilities associated with homeownership. Still, others want the freedom and flexibility to move when situations, events, and opportunities occur throughout their life without the burden of having to worry about leaving their home behind.
Since the Great Recession, there are many different barriers associated with purchasing a home.
The upside is, the single-family home supply has increased dramatically. As a result, there is now a construction boom occurring when it comes to multi-family construction. Today’s rentals are both new and appealing. There is a very large supply now available.
The appeal of renting and experiencing ease in doing so is causing an increased demand.
When you take all of these factors and mesh them together, it is clearly evident why those with the money to buy simply choose to forego the purchase process and elect to settle down into a rental.
What Barriers Stand in the Way of Owning a Home?
The barriers that have pushed more people towards rentals are mostly economic. The credit requirements to obtain a mortgage are now considered to be extremely stringent.
While it is true that incomes have increased, they have done so at a much slower rate than the prices of homes that are available on today’s market.
Additionally, many have found that their incomes have increased, but the number of hours that they work have decreased.
For younger groups, student loan debt, the inability to find suitable work, and similar circumstances make it challenging to save up money to put down on a home.
While these barriers – at first glance – seem to only impact the poor, those with high incomes are feeling the effects.
In a case study, high earners were questioned. Only 5% believed that they would be able to experience homeownership over the course of the next year. A total of 63% of all of the respondents claim that being able to afford a suitable down payment is a major problem for them. A total of 69% of those questioned stated that they have a total of less than $10,000 saved up for a down payment on a home.
The economic landscape and general environment are very harsh and unpredictable. Until this changes, more and more high earners are and will be turning to renting vs buying, because that is their only financially feasible option at this point in time.
What Areas Attract Lifestyle Renters?
To date, lifestyle renters are electing to move to highly dense, urban regions. There are several reasons for this.
First, renting is a highly viable option in these areas and multi-family housing units are more abundant. Next, a multitude of job opportunities are typically available in urban areas. There are also a multitude of amenities available. Finally, the increase of various technologies available have made it possible to enjoy a high quality of life in the urban areas for lifestyle renters.
Most individuals that opt to rent instead of buy are those who have recently experienced an issue in their life like a divorce, the aging baby boomer population, and those who are identified as “millennials”.
Construction in Process Outside of Denver
If you are a lifestyle renter, you will be pleased to know that there are construction efforts taking place just outside of Denver designed with you in mind.
So far, more than 130 homes are being built for those that want to rent instead of buy. In addition to this, these types of homes are also being built outside of Colorado.
So far, evidence has been obtained of such endeavors in the States of Arizona and Texas. It is expected that other builders in other areas of the nation will take hold of this concept and will start constructing homes designed for the higher-income lifestyle renters.
While homeownership is still advised – in terms of financial benefits – rental availability for high-end earners will continue to rise in popularity.
When it comes to long-term progress, the trend of lifestyle earning may indicate the changes that will impact the “norms” of how people elect to pay for their housing. Whether they choose to rent or they choose to buy. This could – potentially – actually benefit the economy, long-term. By renting now, more and more people may be able to pursue home ownership in the future. For those with rental property, it is advised that you take advantage of this unique opportunity to rent to high earners.
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