According to new data released by Urban Institute, single-family rentals are being developed faster than any other type of American housing. Approximately 35% of the country’s 44 million rental units are single-family rental homes and townhouses. That’s a 4% increase since 2006.
USA Today reports that millennials are leading this housing rental trend. In the past, millennials have found it difficult to pay for a down payment and high mortgage. This is because of the housing market crash in 2008, a growing national student loan debt, and lower incomes.
“While the age distribution of the U.S. population suggests most millennials are reaching the age of household formation and demand for single-family homes, much of this demand is likely to be channeled into the rental market,” said Sara Strochak, a research assistant with Urban Institute.
Modern technology has also made it easier to rent now than in the past. For instance, Facebook has approximately 1.97 billion active users around the world. Many millennials can find roommates through this and other immense social networking sites.
However, millennials aren’t the only age group interested in renting. Between 2009 and 2015, the number of individuals over the age of 55 who are renting homes increased by 28%. Additionally, over two-thirds of those renting single-family homes in cities such as Minneapolis, Houston, and Miami are over the age of 65.
According to Daren Blomquist, the senior vice president of ATTOM Data Solutions, the increase in single-family housing rentals may have an unintended impact on American neighborhoods. Blomquist says renters aren’t as involved in their neighborhood communities as homeowners are.
“For example, people who want to own a home may no longer be as active in the typical suburban white picket fence neighborhood as properties in those neighborhoods become more prominently rentals,” said Blomquist. Blomquist added potential homebuyers may be pushed out into urban, walkable environments or even into rural areas.
However, this may not be the case. Should renters be less interested in community involvement, they may be more likely to rent in urban areas with attractions such as entertainment and eateries. Potential homebuyers, in contrast, continue to show a benefit in staying in suburban neighborhoods.
For instance, when it comes to outdoor features, up to 14% of homeowners will add outdoor kitchens to their backyard and 41% of homeowners report that exterior lighting is essential. Outdoor kitchen installations and exterior lighting projects aren’t available to those who buy homes in urban areas.
What’s more is that 78% of recent homebuyers report their real estate agent was helpful in finding out information about the neighborhood. This means potential homebuyers are just as interested and invested in their potential communities as they’ve always been.
There’s no right or wrong answer when it comes to choosing whether to rent or buy a home. Those who are used to renting apartments may choose to rent a home to ease their way out of apartment living.
High mortgage prices and large down payments may also deter those who are older from purchasing a house. However, those who own homes also receive a greater number of benefits.
So how do you know when you should rent and when you should buy? According to economist Grang Long, “The point in time in which the benefits of owning a home exceed the benefits of renting that same home is the tipping point.”