A recent Census Bureau report showed that construction began for 11,000 single-family built-for-rent houses in the second quarter of 2019. Mind you, these are not apartments, but single-family homes built specifically to rent. A recent National Association of Home Builders blog post stated that renting by choice is gaining popularity among millennials.
The CEO of a build-for-rent developer stated, “What we were shocked to find out was it was people that had great credit, they had money for down payments, they had great incomes but they just didn’t want to own a home.” So their renter clientelle does not consist of people experiencing job loss, credit challenges, etc. They could buy a home, but they choose to rent instead. It’s a lifestyle decision.
Here’s a negative consequence of this choice. William Wheaton, a MIT housing economist, recently made said to NPR, “Owning still makes much more sense. If prices continue to rise, buying will be a money tree.” Even home price appreciation occurs at low levels, that growth serves to build personal wealth for the home owner. So home price appreciation builds homeowner equity. In addition, the principal component of every mortgage payment also builds homeowner equity. A tenant’s monthly rent checks are expense only – there’s no wealth building when it comes to paying rent.
From a long-term wealth perspective, owning builds wealth better than renting (especially with today’s low interest rates and strong home affordability). If you are renting in Georgia now and wonder if owning would benefit you financially, give me a call. We’ll run some numbers and see if home ownership is better for you financially.
