The idea that owning your own home is the ultimate American dream is being turned inside out by a new way of thinking.
Three years ago, when I moved from Georgia to Arizona to fulfill my long-held desire to live in the Southwest, I decided to try a novel approach to my new living situation: I opted to rent a home rather than purchase one. Meanwhile, back in Atlanta, my real estate agent found an affluent renter for the 100-year-old midtown condominium that I had owned for two decades — a 40-something attorney new to town who wanted to experience an urban Southern lifestyle while establishing his practice. Turns out, he owned a home in San Diego that he was renting out.
When I relocated, I spent my first seven months leasing a single-family house in a Scottsdale golf-course community that featured a view of the city’s famed Camelback Mountain. After my stint in Scottsdale, I set my sights on Cave Creek, Ariz., a tiny community carved out of the pristine Sonoran Desert. This time around, I opted for a three-bedroom, two-bath Santa Fe-style rental in a quiet neighborhood within walking distance of the town center and hiking trails. As it turns out, the novel approach of renting instead of owning has been a dream come true for me — and numerous others are turning similar dreams into reality.
The Rise and Whys of the New Rentership Society
It used to be that the only folks who rented were low-income or bad-credit types with limited options. But not anymore. Since the housing bust in 2008, the renter population has swelled to 43 million households, according to a 2013 study conducted by the Joint Center for Housing Studies of Harvard University. Demand is expected to continue to grow by 4 to 4.7 million households by 2023, according to the Harvard report. And surprise — that population includes successful professionals, families and retirees. A 2011 Morgan Stanley report posits that a combination of falling home prices, limited mortgage credit, continued liquidations and better rental options is fundamentally changing the way Americans live. This movement has been dubbed “The Rentership Society.”
As voluntary renters, or renters by choice, many Americans across all stages of their lives are living in far better (read: nicer, safer) neighborhoods than ones in which they could — or want — to buy. Additionally, they’re able to try on different neighborhoods, cities or states without having their money tied up in a mortgage — leaving them the freedom and flexibility to vacation frequently, relocate for a job, start a business or make other investment choices.
The stigma of renting being akin to throwing your money away is also beginning to fade. Much like the choice to remain single or child-free, the decision to rent versus buy a home is increasingly being accepted as a legitimate — even favorable — option. According to a 2013 report from the MacArthur Foundation, 57 percent of U.S. consumers say buying has become less appealing, and 54 percent say that renting has become more appealing. A majority — 61 percent — say that renters can be just as happy as homeowners, turning the American dream on its head.
As property values have plummeted, owner-occupied housing is losing some of its luster. For the first time in recent history, the government is no longer promoting home ownership for all Americans. Many past and current owners are skittish about owning, while many millennials — those born between 1980 and 2000 — have seen the market volatility and are rejecting home ownership as a rite of passage altogether. Andy Seth is an entrepreneur, philanthropist and co-founder of Denver-based wealth-management firm LotusGroup Advisors. He says that from a global perspective, a $500,000 mortgage is hardly the stuff of dreams. He chooses to rent a house, and he’s keen to perpetuate a fresh American standard of success. “The new American dream is all about having the money, time and mobility to make life count. I choose to rent and fix my monthly costs, using the spare time and money to invest, travel and cultivate my community,” he explains.