Why renters rent, and who plans on leaving
A recent Freddie Mac survey of 2,000 adults shows that 60% of renters plan to continue renting for the long term. There are a number of reasons for this, from the perception of not being able to afford or qualify to buy a home, to not wanting to be responsible for maintaining a home.
Those surveyed were on the whole positive about renting, finding it:
- Is cheaper than owning a home
- Is more affordable in living in or near major metro areas
- Provides for more flexibility in where to live
- Is less stressful than owning a home, particularly in terms of repairing and maintaining a home
- Protects against falling home prices
Survey participants also noted some drawbacks to renting, such as not using rent money to invest in a home and being under some control of their landlords.
Though renting does seem to be more cost effective than owning a home, just 38% of renters say they have extra money in their paychecks to save or spend as they please. Up to 45% don’t see extra money beyond living expenses and 17% worry about paying all their monthly expenses on their regular income. In contrast, 62% of homeowners say they have extra money each month for non-essentials.
How long will they stay?
About 61% of renters plan to continue renting for at least three more years, whereas just 39% of tenants plan to buy a home in that time. Those most inclined to buy a home soon include nearly half of those ages 25–34 and 58% of 35–44-year-old renters. Use property management software so the process will be easier!
Most of those not looking to purchase a home soon are concerned about their ability to afford a down payment and/or a poor credit history. Still, nearly 40% of renters just don’t want the hassle of owning a home and keeping up repairs.
The more you know
Knowing what renters look forward to and what they don’t like may allow property owners to adjust their terms to assuage some concerns. Providing a stable rental agreement may give tenants the peace of mind to stay. But if your renters are between 25–44, you may be able to expect some turnover in about two to three years, if they have the spare income to save.
The Rise of the Renter | Long-Term Property Management
Many renters want to continue renting for several years before buying a home, so real estate investors can look forward to steady incomes and low turnover.