More and more Americans are renters by choice as the modern American Dream involves renting rather than the desire to own a home.
By Virginia Love
While the American Dream might have included various components throughout the decades, one constant was the desire to own a home. For modern dreamers, however, that isn’t necessarily the case.
According to The New American Dream Report recently released by the property software management company Entrata, 41% of renters claim their American Dream has nothing to do with homeownership. In fact, 20% anticipate being lifelong renters, which represents a 33% increase from 2021.
The causes for this paradigm shift are wide-ranging, but it certainly includes the idea that skyrocketing home prices have made homeownership an unattractive option for many—even for those who can afford to take the plunge. In addition to the long-term financial commitment, property upkeep, taxes and insurance are stressors that can be avoided by renting. The report, based on a survey of 2,000 renters conducted in January, found that 23% of respondents enjoy the location flexibility provided by renting and 17% like the financial flexibility of not being tied to a mortgage.
Additionally, renting no longer carries the negative stigma of the past, when it was largely perceived as a necessity-based alternative for those who couldn’t afford a single-family home. The term “renter by choice” is more common in current times, particularly with a wide range of available rental homes with attractive amenities and an increased supply of single-family build-to-rent homes.
When you consider the price and commitment components of homeownership, contrasted with the convenience-based factors of renting, it helps underscore why homeownership is not as much of a standardized American goal as in the past. According to the study, 66% of renters say renting fits their current lifestyle more than homeownership.
Essentially, experiences and flexibility have become greater priorities to the modern American.
Preference a more prominent factor than money
Some might make the counterpoint that it’s easy for someone to dismiss homeownership as a priority when it isn’t financially feasible.
But the perception that renters are too young or financially unequipped to purchase a home has become something of an outdated generalization. The study shows that 33% of renters say they could afford a home that meets their needs, but ownership doesn’t necessarily fit into their current lifestyle. Additionally, 25% of renters with credit scores 750 and above—those who could easily qualify for a home—never want to stop renting.
For many, renting also serves as a key component to their career paths. According to the study, 65% of renters are happy with the direction of their career and 35% believe being a renter gives them more career opportunities than being a homeowner. Additionally, a robust 63% of renters indicated that they have a similar or better quality of life than their parents at a similar age.
Other financial priorities
The traditional notion of “I need to save to buy a house” doesn’t apply to many, as a sizable contingent of younger Americans are earmarking their funds for other financial priorities.
More than half of those surveyed (56%) say they’re currently prioritizing paying off debts rather than saving, and 43% prefer to have their savings in investments and retirement strategies rather than real estate, because they are easier to liquidate.
While homeownership does build equity where renting does not, the concept of having all of one’s income dedicated to a house is becoming an old-school thought process. Some renters are looking even further down the line with their funds, as 36% of renters prefer to invest in retirement as opposed to saving for a home.
For the majority of respondents, any discretionary money is dedicated to activities such as dining, travel and entertainment, such as concerts and sporting events. A sizable 74% indicate that they designate any extra funds toward these types of experiences. Nearly half of respondents—46%—say they have the financial means to pursue their hobbies.
Non-monetary benefits of renting
While renting might often be more cost-effective than homeownership, many Americans also enjoy the social aspects of being part of an apartment community.
Renters also have the ability to use a property’s common areas to host their own visitors, which for many, is preferable to having a backyard.
Forty percent of renters have utilized a property’s communal spaces for social gatherings, and approximately one-third (34%) indicate that their friends or family visit at least once per month.
More than half of respondents (51%) say they enjoy the community aspect of renting, and many have fostered meaningful connections with their neighbors. To that end, 67% of renters have helped neighbors at their properties while 61% have had neighbors assist them.
In summation, homeownership no longer qualifies as a primary measure of success or fulfillment for many of today’s Americans—particularly younger generations. While a certain percentage of people will always be renters by default due to their financial situation, more and more Americans are renters by choice. That’s because flexibility, experiences and other financial priorities are increasingly more compelling than homeownership to many.
About the author:
Virginia Love joined Entrata in 2019 as an industry principal. She is directly involved with marketing, product, and sales as a liaison from the industry to these departments. With nearly three decades of industry experience, Love has served on numerous multifamily committees and boards for industry organizations including the Atlanta Apartment Association, Georgia Apartment Association, National Apartment Association, National Multifamily Housing Council and Zillow Multifamily Advisory Board. She is a National Apartment Association Lyceum graduate.