05/08/2012
Americans Embracing The Change To Flexibility From Stability
For decades renting has long symbolized striving, but well short of
achieving. That has changed as we continue to climb our way out of
the Great Recession. In short, Americans are getting over the idea
of owning the American dream; increasingly they�re OK with renting
it.
Across the board, for goods ranging from cars to books to clothes,
Americans are increasingly acclimating to the idea of giving up
stability of being an owner for the flexibility of being a renter.
And the new realities of our increasingly mobile economy make it
more likely that this transition from an Ownership Society to what
might be called a Rentership Society, far from being a drag, will
unleash a wave of economic efficiency that could fuel the next boom.
The cold, unsentimental fact about the American dream is that many
have been disenfranchised from it. For the past three decades,
especially, consumers haven�t so much bought their quality of life,
as they�ve borrowed from banks and credit card companies.
That�s what the Rentership Society is all about � buying more
intelligently, and it starts at home, literally. Housing is the
biggest single component of consumption in the U.S. economy and the
source of much of our present misery. According to the Bureau of
Labor Statistics, the typical consumer spends 32% of his or her
budget on shelter. (In the last decade that generally meant
borrowing a lot of money to afford ownership of a home.)
Homeownership grew steadily, finally peaking at a record 69% in
2006, according to the Census Bureau. But those gains were
short-lived and came at a truly massive cost; a huge mortgage bust,
expensive bailouts of Freddie Mac and Fannie May, an overhang of
millions of foreclosed properties, and failing home prices.
Ownership-boosters failed to note that homes purchased in 2005 and
2006 with no-money-down, interest-only mortgages weren�t really
bought. They were simply rented until the �owner� flipped them or
walked away from the mortgage. Far from strengthening low-income
neighborhoods, this destabilized them through the inevitability of
foreclosure.
According to Moody�s, by late 2011 it was cheaper to rent than to
own in 72% of American metropolitan areas � an increase from 54% a
decade ago. About three million more households rent today than did
at the height of the bubble.
In
the post-bust climate, renting has emerged as a much more
economically efficient way to pay for housing. A one-year lease
represents a far less onerous financial obligation than a 30-year
mortgage. And, for an increasing number of Americans, it simply
makes more sense to rent these days.
