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America's 'Rent Crisis' May Be Ending (fortune.com) 584

An anonymous reader quotes Fortune: A new study suggests that nearly a decade of housing shortages and rising rents in the U.S. may be reversing course... From 2010 to 2016, America added nearly a million renter households a year. But the census showed a decline in that growth rate in 2016, and some early 2017 data shows an actual decline in renters so far in 2017. Recent census data also shows a rise in vacancy rates.

According to Harvard's Joint Center for Housing Studies, that's because foreclosure numbers have declined and young homebuyers are re-entering the market. Home ownership in the U.S. took a big hit from the foreclosure crisis and Great Recession of 2007-2012, while the rental market struggled to meet the new demand. Other insights in the report mostly follow from that shifting reality. Rents are increasing more slowly. Fewer renter households are "cost-burdened," or paying more than 30% of their income in rent, than they were two years ago.

The report also predicts that many high-income households may continue renting rather than buying a home. But it'd be interesting to hear how that compares to Slashdot readers around the world. Are you renting or buying -- and if renting, do you feel that your rent is too high?
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America's 'Rent Crisis' May Be Ending

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  • by rfengr ( 910026 ) on Monday December 18, 2017 @07:59AM (#55760171)
    The millennials are having kids, and finding out that hip loft or apartment in the inner city, along with it’s school district, ain’t all it’s cracked up to be. They are fleeing to the suburbs. Soon they’ll be ditching the Feel the Bern shirts and voting Republican.
    • C'mon... do you really have to piss on everyone's Monday morning...?

      Of course you are correct; kids change the dynamic.

    • >Soon theyâ(TM)ll be ditching the Feel the Bern shirts and voting Republican.

      "If you're a conservative before 25 you have no heart. If you're liberal after 35 you have no brain."

      It's too old, and there are too many variants to attribute that quote correctly. I think it's a false dichotomy anyway; there are a LOT of social issues on which you might have opinions, and it seems extremely unlikely they're all going to fall into the same camp (whichever it may be).

      I'm not particularly keen on the left

      • by ranton ( 36917 ) on Monday December 18, 2017 @10:51AM (#55761363)

        As a general rule (an unresearched, unscientific gut-feeling kind of rule!), people do seem to get more conservative as they age. I think it's fear - fear of losing what they have accrued, fear of a lifetime of experience becoming less relevant as they age, and an unwillingness to re-examine things they think they got figured out decades prior.

        I don't think becoming more conservative as you age has much to do with changing political views. In fact the only research I have seen who track actual individuals' views over time has shown that supreme court justices become more liberal as they age. [fivethirtyeight.com] (although that may be because they are already older when they become justices) From what I can tell it has more to do with the difference between social and fiscal liberalism and how societies become more socially liberal over time.

        I for instance am a social liberal and fiscal moderate. This means in 2017 I clearly lean Democrat. But in 2047 all of today's socially liberal battles will probably have been won. Or at least not nearly as big of issues as they are today. So I will likely be a social and fiscal moderate in my 60's. My views of women's reproductive rights, LGBT issues, and safety net programs will not have changed, it will be society's views on them which have changed.

        While I am a proponent of a basic income today, perhaps in 30 years I will be against it going up from $30k/year to $40k. Then I might consider myself a fiscal conservative.

    • The irony is that many "inner city" schools are better than schools in affordable subBURPs these days. To live in a 'burp with good schools, you'll end up paying as much (or nearly so) as for living in the city.
    • Soon they’ll be ditching the Feel the Bern shirts and voting Republican.

      My understanding is that this is mostly just a misconception based the republican supporter base being skewed towards old people because of to the way younger generations tend to be more progressive than their parents. People don't start voting republican when they get older, no, old people just vote republican more often because they're on the whole more conservative than their children are or will ever be.

      I doubt anything will happen because of this except the 'burbs becoming more liberal and republica

      • by lgw ( 121541 )

        Socially, all a liberal has to do to become conservative as he ages is not change his social views. You'll find that's quite common, although sometimes people do actually become more conservative relative to their younger selves when they have kids. Having kids commonly changes one's attitude towards risk-taking in general.

        Financially, people often become conservative once they have a stake in the system - once they have something to conserve. From the simple (and normal) selfishness of not wanting new t

  • by MoarSauce123 ( 3641185 ) on Monday December 18, 2017 @08:02AM (#55760177)
    I was renting for a long time until a house in the neighborhood came on the market. We did the math and after mortgage, taxes, insurance, and other fees we came up with 300$ less than what we paid in rent. Buying not only saves us a lot of money, it builds equity. As a first time buyer we made use of the available assistance that allowed us to invest into remodel and a new roof. "New roof?" you say, an expense that a renter does not have to worry about. True, but even with the loan payment that will end soon we still pay less per month compared to renting....for a house twice the size.
    • by thaylin ( 555395 )

      and depending on the cause that new roof may even be paid for by the insurance company.

    • by aaarrrgggh ( 9205 ) on Monday December 18, 2017 @08:38AM (#55760383)

      Running the numbers is important. When I moved to Los Angeles, I expected to be here for a year or two max. Have been renting for 11 years now. While housing prices have appreciated beyond rational levels, it is only that which makes the equation for buying (retroactively) work. We put offers in on a few houses over the years, but our monthly costs would double, and the net return on investment is basically on par with what we get in our brokerage account, at best. (We bought a vacation home instead for what our down payment would have been.)

      Real-estate is mainly an inflation hedge in the long term. It is helpful for diversification, and it can be something useful for survival, and it is a good way for people that can't save otherwise to be forced into it. It is a poor investment if you need to sell in less than 5-6 years, or if you end up buying a much bigger house than your present needs dictate to accommodate long-term family plans.

      • You've hit the nail on the head:

        Buying a house is a pretty good (usually low risk) investment, but it has one significant down side: It ties your investment to your lifestyle. Pretty much any other form of sensible investment is decoupled from anything that you do on a daily basis and so doesn't affect your mobility.

        One of the big problems with globalisation is that it is far easier to move capital than labour and so it disproportionately benefits the individuals whose net work is primarily capital and n

      • It is a poor investment if you need to sell in less than 5-6 years

        Absolutely. And I'd second taking a hard look at the "math," as well as including a lot of unforeseen potential costs of home ownership if you're not planning on staying long-term.

        Most people just do comparisons of rent vs. mortgage+taxes or whatever. There's often a lot more to home ownership. There are transaction fees both to buy and sell, agent fees if you use one, and then you have the real question of how much maintenance really can be.

        If it's a newer home, and you're lucky, maintenance may not

    • This is very true. Especially once you start needing 3 bedrooms.

      And the price stays the same every year as opposed to an apartment which raises rent but not enough to pay the cost of moving . Well least that's how it was before property taxes in San Antonio sky rocketed. I'm paying almost 3 hundred more that when I moved into my house 4 years ago. My escrow costs as much as my mortgage.

      Even with the high taxes, it's still cheaper than renting a 3 bedroom apartment - and I have privacy and a yard.

    • I second this in my area too. When I bought my house, it was about $700 a month for a 1 bedroom apartment with not much square feet beyond that. For a 20 year mortgage the payment was about the same for a 4 bedroom house with 2000 square feet (including unfinished workshop) a quarter acre property and a full garage. Plus I paid extra and paid off the mortgage early.

    • You still did it wrong.

      You should have bought a duplex or triplex. They're typically prices similarly (or cheaper) than single family houses, and, if you rent the other unit(s), you have some other skell paying most of your mortgage and taxes. Beautiful situation.

      • by Baron_Yam ( 643147 ) on Monday December 18, 2017 @09:16AM (#55760559)

        It's much better to rent a different property. You really, really, REALLY don't want to live in the same building with a bad renter. People do it, but it adds stress to your life that isn't worth the money (in my opinion, of course).

        Generally that's going to mean having your primary residence be smaller, and having it paid off. I guess that means adding a decade to your schedule for becoming a landlord, but I highly recommend it. I haven't done it (yet), but I have a couple of friends who have.

        • If you own a duplex, make sure not to rent to bad people -- it's relatively easy to vet/find good tenants through your social network if you're not advertising in public and aren't in an extreme rush to rent the unit.
    • I was renting for a long time until a house in the neighborhood came on the market. We did the math and after mortgage, taxes, insurance, and other fees we came up with 300$ less than what we paid in rent. Buying not only saves us a lot of money, it builds equity. As a first time buyer we made use of the available assistance that allowed us to invest into remodel and a new roof. "New roof?" you say, an expense that a renter does not have to worry about. True, but even with the loan payment that will end soon we still pay less per month compared to renting....for a house twice the size.

      As a homeowner, I'd say this is highly situational. In my case, I'm certainly building equity, but it's hard to feel that since I have to make repairs (and with homes, you always have to.)

      Main reason we bought the house was to get as close as possible to the 2nd best school district in the county (and one of the best in the nation), to build equity and because it is hard to find an affordable renting place in such neighborhoods. Otherwise, I would have stayed as a renter till my kids go to college.

      Ultim

  • "...while the rental market struggled to meet the new demand."

    Really? Yeah, those poor landlords had to raise their rents...oh, the horror.

    • Really? Yeah, those poor landlords had to raise their rents...oh, the horror.

      Only a portion of the demand is for higher-rent units. Most of the demand is for units of the same or lower price. Without that demand being filled, people wind up having to commute to work, which is inefficient. The inefficiencies add up, with the commuters adding inefficiency to other businesses depending on the same transportation conduits.

      The landlords are clearly not suffering. Everyone else, however...

  • I own my house outright. It is one of nine homes in a small HOA in Miami FL that are worth about $400k to $450k. There are two rented for $3,500 per month wich sounds insaine considering the property value.
  • I see new home construction all around us. What I see is a dearth of housing that is suitable for young families as opposed to middle age, dual income families. You want a $600k+ home? No problem. We have a ton of them. What you won't see is anything in the $200k-$300k in major regions that isn't either in the ghetto or looks like it should be.

    This is one of the fatal flaws in "free trade." You can't have "free trade" in land and housing. If wages harmonize between the US and China such that an American wor

    • I see new home construction all around us. What I see is a dearth of housing that is suitable for young families as opposed to middle age, dual income families. You want a $600k+ home? No problem. We have a ton of them. What you won't see is anything in the $200k-$300k in major regions that isn't either in the ghetto or looks like it should be.

      This is one of the fatal flaws in "free trade." You can't have "free trade" in land and housing. If wages harmonize between the US and China such that an American worker's wage goes down 25%, the cost of land and housing won't go down with it.

      You know what would hep with this? School choice - whether full on vouchers so I can send my kids to private school or getting rid of districts so I can send my kids to a better public school.

      When I was looking for homes, several areas of town we ruled out solely due to the school district. I can make my home safer but I can't make my kid's school safer. I could have gotten a house 2 times the size of mine if I didn't have to worry about the school my kids would be going to.

    • Isn't a condo, or a townhouse, or even a "starter home." It's a clapped out duplex that they can renovate. It's lovely to have someone else (tenants, babeh!) paying most of your mortgage and property tax at age 35.
  • by Opportunist ( 166417 ) on Monday December 18, 2017 @08:21AM (#55760287)

    Just wait 'til everyone who mortgaged their home to buy bitcoins has to pay that mortgage back, that should put some cheap houses into the market.

  • by misnohmer ( 1636461 ) on Monday December 18, 2017 @08:25AM (#55760311)

    In my neighborhood there were a whole bunch of rental homes, all owners who couldn't sell their homes because the home values have dropped (some have been holding onto those since before 2008). This year home prices finally reached pre-2008 levels and a whole lot of those rental homes suddenly went up for sale - owners happy they can finally get rid of them without writing the bank a large check.

  • I'm wondering if some of these numbers are happening because more people are choosing to live together to save money. This could include all sorts of situations that don't involve romance like friends sharing an apartment, college graduates moving back with mom and dad, and so on. It's interesting to note that the actual article didn't paint as rosy a picture as the excerpts above did. It says that people with higher incomes are now renting and a higher percentage of renters are older, white, and have k
  • My wife and I had been renting for a few years, paying about $1,350 per month for a 2-bedroom ranch with a fenced in yard. Earlier this year our landlord moved out of state and sold his rentals, giving us 2 months to find a new place. We discovered that our rent was incredibly cheap relative to anything similar: we'd have to pay at least $1,700 to $1,800 to rent anything comparable to what we were living in in the same area.

    It turns out that a mortgage for a similar house around here is about $1,800 to $
  • I was divorced 3 1/2 years ago, and the ex and I sold our house. I was house hunting and was not having much luck, so I was looking into renting.

    This is a college town, so rentals were super expensive and not much available. Finally found a house, 3 bedroom rambler, bit of a fixer-upper, but certainly livable while I update it. My house payment is HALF what the rental on a similar apartment would have been. Plus I have plenty of quiet and privacy where I am at now, something impossible with apartments.

  • by gurps_npc ( 621217 ) on Monday December 18, 2017 @09:07AM (#55760505) Homepage

    Two years ago I owned my own home with over 75% equity in the home. Now I rent. Mainly because I live in NYC and when you live in NYC, the mortgage + taxes + maintenance often exceed the cost to rent.

    In other words, rent is cheap compared to buying (although it is very high as compared to most of the rest of the country).

    When you buy real estate in most of the US, you are both saving money and doing a reasonably safe, reasonably profitable investment.

    But in NYC, particularly Manhattan, you are most likely to be spending MORE money every month to buy rather than less, and investing in a riskier, high profit investment. I decided that it was too high risk for more and I did not have the extra cash to do it.

    • Buy in Jamaica. I don't mean the nation, I mean the part of Queens. You can get a comfortable house within walking distance of the subway for about $200-300k, maybe even a fixer-upper duplex.

      Oh, and good South Asian and Latin American food all around you :)

      • I hope you don't mean South Jamaica. My friend who grew up there would joke that the reason there was so much street parking is teams of a dozen guys carrying parked cars down to the chop shop. And a rap lyric that went something like "I come from South Jamaica Queens, where they beat you up and take your jeans. Most these kids put a toaster in your ribs!"

        Fun things to think about while waiting for the Q112...

        On the other hand, they are (finally) building some tall non-luxury apartments within walking di

    • by DarkOx ( 621550 )

      Come on that doesn't wash!

      If the 'cost' of renting was lower than ownership there would be no rentals. Sure there are some small economies of scale managing multiple properties but that does not explain it. Rentals exist for two reasons.

      1) Some people don't want to commit to a large illiquid asset when they know they might want to move in the foreseeable future.

      2) As a function of capital. You need a home and do not have / are unable to raise the required capital for a cost lower than the premium a land

  • 12-1/2 months ago we left 25 years in a metro rental complex in the Mpls/St. Paul beltway when the gentrifying new owners raised the rent on the townhouse three times in a year. Exiled to a mortgage in the far xurbs 25 minutes from the beltway. At least an M-F city bus terminal ends a mile+ away. I would say our market is just heating up on moving the non-well off out. "Maturing" into a typical world metro market perhaps.

  • by 140Mandak262Jamuna ( 970587 ) on Monday December 18, 2017 @09:22AM (#55760607) Journal
    Especially now.

    It is incredible for 60% of the Americans, the home they live forms more than 50% of their networth!. Homes are very very illiquid. It ties you down. You are not able to follow the economic trends and go where the jobs are. Makes you do stupid things to "protect the value of home". They are expensive to maintain. It is really a dumb way to save money. Renting is a far better solution for most Americans.

    This especially true now. The babyboom peaked in 1952, and their retirement is peaking in 2017. The market is awash with four bedroom, three car garage, quarter-to-half acre lots. The demand will fall, not rise for these properties. Younger generation is not as car obsessed as the previous generations. They do not see the point in maintaining lawns or raking leaves. Any fool buying a half a million four bedroom 0.5 acre lot home in the suburb today would be lucky to sell it at cost 20 years from now.

    You can add me to that list of fools. I could not convince my own wife about this. "Millions of people can't be fools. We do what they (meaning richer White people) do". Lucky for me, I can secure my retirement even if lock away half a mill in such a non performing asset. So I agreed to be smack dab right in the middle of affluent white neighborhood. Government always takes care of them, so I would not lose much.

    But for younger generation starting out, "stay away from owning homes. Wait for a down turn, buy only if the mortgage is less than rent, and you are assured of job safety for 20 years, and you are planning to stay in that neighborhood for 20 years. Always watch the affluent white class is doing and do that". Invest in index funds. Put 33% in SDY, VNQ or such high dividend yield large cap. 33% in MidCap, 33% in SmallCap. Treat your credit card limit as the emergency funds. You have six month lead time to cash in some securities. Don't fall in love with cars. Start with civic, corolla level, and upgrade to pilot, crv, rav4 level. Don't pay for luxury car brands. Enjoy life.

    • Bad advice. Renting a house is paying someone else's mortgage. Landlords aren't renting for kicks: they want to make money ON TOP OF paying off the mortgage and taxes, and maintenance costs, etc. Renting will always be more expensive than a mortgage for any particular property, it has to be. Renting an apartment is fine, but renting a house is really not too smart financially, unless you know you aren't going to live in an area for a significant period of time. Of course, if you don't care about the financi
  • by albeit unknown ( 136964 ) on Monday December 18, 2017 @11:40AM (#55761807)
    This sort of article is rarely objective. The people beating the drum most often about the necessity of homeownership are people like real estate agents and mortgage brokers. In the linked article, the interview is with the CEO of a paint company. They make their money from home improvement projects - something less frequent in a rental property. In reality, the purchase vs rent question is closer to 1:1. Here are some of the disadvantages of owning a house.

    1. Not an investment, it is a capital asset - over the long term housing tracks inflation almost exactly
    2. Highly illiquid asset
    3. Variable maintenance costs and also depreciates in value over time
    4. Most people will have a large portion of their net worth tied up in a single asset, increasing risk
    5. Substantial costs to buy and sell the house, in the form of broker fees, etc.

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