A Story in the Wall Street Journal illustrates the recent decline of home ownership
I came across an interesting story about a major demographic shift among home owners and home builders in the USA recently. The article was written by Yahoo Economics Editor Daniel Gross, The story appeared in the May 5-6, 2012 edition of the Wall Street Journal.
Mr. Gross notes that single family new home starts have dropped from over 1.1 million in 2007 to just a bit over 400,000 in 2011. He also reports that home ownership has dropped from 69% in 2006 to 65.4% today. Mr. Gross points out that, according to Moody’s, in 72% of metropolitan areas, it was cheaper to rent than to own, up from 54% a decade ago. In 2011, single-family housing starts fell 9% from the year before, starts of structures with five or more units were up 60%. In the first quarter of 2012, starts of multifamily housing structures were up another 27%, while single family starts were up only 16.7%.
Mr. Gross also points out that builders increasingly intend to rent out what they build. In 2007, only 62% of the housing units in buildings with two or more units were built for rental. In 2009, 84%of the units in such buildings were built for rental. In 2011, 91% of the units in such structures were aimed at the rental market.
Many of you with whom I have met have heard me recently speak of a shift towards renting. Mr. Gross echoes some of my thoughts on this point in his story.
We all know that life is about change. For example, your job may disappear, you may need to relocate if your company pulls out of the area and offers you a relocation, you may need to travel to another part of the country to help a child raise a sick or needy grandchild, you may need to relocate to take care of the affairs of an aging relative, some parts of the country may recover economically faster than where you are currently living, potentially offering you greater opportunities somewhere else.
If you feel the need for some flexibility in your living, employment, and relocation opportunities, then you may consider renting for a while. In most areas, housing prices are not increasing. Taking a break from home ownership to rent and to put your financial house in order might not be economically harmful. Renting might be a prudent choice in some cases.
If you need to get out of your underwater house, your underwater mortgage, or you want to discuss your rent vs. buy analysis and how the decision may be affected by your bankruptcy filing, please, give us a call at 253-383-1001. We are here to help.