Renting is the new American dream
If you're in the market for a home, you know it's harder than ever to qualify for a mortgage. Many need 20% down and excellent credit. That's why for millions of folks, the new American dream is to rent.
“I thought about investing in purchasing a home, my father purchased a home when he was my age. When I knew I was going to move to Baltimore I looked at properties but I just knew in my line of work I would need to be re-locatable,” said Xander Clarke.
And as the housing market sinks, Xander sees friends who own homes struggling.
“It's been on the market for a year, not getting the price they're asking for. It's scary to think you have to keep lowering the price,” said Clarke.
The numbers tell the story. Home ownership has dropped steeply from its peak rate above 69% in 2004 to the current just about 66%. Home ownership is now at the level it was in 1998. But, even those who have the money and can withstand the tougher credit checks are opting not to buy, but to rent instead. Chris Mayer researches housing for Columbia University Business School.
“I think a lot of people are looking and saying even if I can make the down payment, even if I have the income and the credit, is this really the best time to jump into the market?” Mayer said.
Doug Bibby is president of the National Multi Housing Council.
“We're seeing lots of people opting not to buy right now even though they can afford it because some are betting on housing prices falling further. There are some predictions they will fall more. There are others who are betting on the ability to change,” said Bibby.
And with the jobless rate at 9.1%, being able to pick up and go where the jobs are is critical.
“I prefer to rent. I like the flexibility that comes along with renting,” Clarke said.
“I think there's a lot of evidence that people need to have down payments so we should have viable options for people who are not in position in their lives to be owners, and there's nothing wrong with that. And hopefully we'll start to eliminate some of the stigma so that when people buy, they'll buy for good reasons,” said Mayer.