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Jon the VGNerd

General Why are people still renting and not buying houses in America?

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I can't help but notice majority of people still renting houses/apartments and not actually buying them, unless landlords care more about money than their well-being of others or if majority of houses, even smaller ones, only cater to the rich and not the poor or the well-off. And this is directed in the good ol' USA where houses and apartments have gotten ridiculously expensive, I'd have to wonder why prices keep going up instead of down, and people just dumping money on renting, rather than buying altogether unless high-paying jobs don't actually pay well and often give their employees abysmal salaries, especially since their funds end up going for food, bills, and other necessities.

Is anyone still paying rent on houses/apartments in the US, rather than just buying them altogether?

(This question is for those living in the US, thought he same might apply outside of the US, like Canada, Australia, or even Europe, including the UK, in case anyone wonders.)

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Beats me. The people who know who swear on renting say that the benefits of not being tied down and having repairs done for you outweigh the benefits of equity in homeownership. I prefer owning, but that's me.

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Maybe once I have a decent job and decide that where I have a house is somewhere I’m going to settle down (with the career path I’ve chosen “settling down” isn’t very easy) :wacko: .

Alternatively I’ve thought about maybe start paying off a cheap house, then sell it with the money I’ve downed into it and work toward a bigger house, if that makes any sense?

I haven’t rented yet to begin with.

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It's a multitude of things really; and it depends on what you're looking for. IIRC; you don't have to worry about things like real estate taxes (which keep going up) and, to a degree, insurance, but there's some downsides there. Personally with taxes and insurance premiums going up I have to wonder if it's worth owning property anymore.

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Well, regardless of what you believe about house ownership I think it has to do with the younger generation not having as much real buying power as generations previously.

That comes from lack of wage growth, inflation, personal debt (especially student debt) and other causes. So I don't necessarily think its a change in culture but different circumstances. 

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  1. Cost of living has gone up. Worth of money has gone down. Wages have mostly stayed the same. 
  2. Places where housing is affordable usually have a catch, mostly high crime rates, low employment and urban decay. 
  3. Space is becoming more of a premium. Cities are expanding. More land is used for farms. Places where there were houses have been developed for businesses. Conservation efforts prevent making more room in natural areas. 
  4. Distances from work, school, home and factors like supplies and entertainment determine the value of a house by distance from it all. Usually the closer you are, the more expensive it is to live and buy there. Dirt cheap to own a house in the Alaskan north slope. More expensive to buy a home near even a modest urban center due to the high demand for places to live there. 
  5. Lousy public transit. Everyone has to take cars places. The more time and effort to get from point A to B, the cheaper it gets. Less time and effort makes it more expensive. A massive rail way or bus network between rural towns and suburban areas would make travel cheaper and more efficient, but due to the logistics and vast spaces between small towns, the only way is by car and that will effect a locations value. 
  6. The economy simply isn't in the shape it used to be. It maybe good, but it isn't good enough. 
  7. Different priorities. Focus on actually getting a meal and having a roof over your head and a bed to sleep in before you upgrade. 
  8. Learning from the past. Baby boomers and Gen X bought their own homes and wound up in debt because of it. They also kinda trashed the economy. Gen Y & Z isn't looking to repeat those same mistakes. Spend within your means. 

I mean I know I won't be able to buy a house on my paycheck, not without saving up for a very long time. I'd just barley be able to stay above the poverty line, living paycheck to paycheck, let alone afford my own place, the utilities that come with it, the costs of repairs, property taxes, etc. I am in no shape for independent living, and I'm pretty sure that extends to a fair few of you on here.                                       

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For me, it's because renter's insurance is a heckuva lot cheaper than homeowner's insurance, and a landlord is going to have to be the one who takes care of any problems with the house, not me. A cheap apartment is just less expensive than a cheap house.

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Houses are expensive, and I can't afford one.

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I think people tend to rent more so over then own is cause they like the idea of not having to have the burden of the possibility of something going wrong within the apartment or house and not having the expenses to repair it. I myself lived in an apartment for prolly 4-5 years but in those years I saved up money to purchase a house. Yes, owning a house means you pay for everything on your own but i guess the plus side of owning a house is the freedom to do whatever you want (within the laws) to said house without a landlord laying down rules for you.

I can tear down a wall to expand a room or I wanna build a shed or replace doors/windows/paint ect... owning i think gives more freedom to do what you like but again it comes down to the individual and what they are comfortable with. If an apartment suits you, thats okay. Not all need to own a house.

As far as pricing goes for rent. I am not familiar with rent increasing in my area at least. You just need to shop around to find the best price for the quality your getting. If no one rents a apartment or what not, the owners will lower the price if no one is willing to pay. Least dats my thoughts ^-^

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To @Denim&Venom's point, many things contribute to it.

I'll also add:

The sub-prime bubble demolished home ownership as a norm. Bank bail-outs and stupid low 30 year bond interest rates inflated the prices. (agents don't sell houses based on the price of the house, but on the monthly payment...so when money is cheap to borrow, then they can ask more for the total cost).

Total loss of financial security. 911 changed our culture dramatically. We've experienced 3 or 4 severe and frightening recessions since, and the middle class has never recovered with earnings.

Pensions and Healthcare are gone. When looking at a 15 or 30 year commitment to a loan, it just doesn't make any sense when you have to pay for your retirement and healthcare now. 30 years ago, nobody ever worried about retirement or healthcare. Even just a decade ago, I only paid $90 a month for a family of 5 with a $500 deductible. Last year I was paying $212 A WEEK - with a $3000 deductible per family member! Anyone want to know why Trump got elected?

Healthcare. Our healthcare system has been on the brink for a while, but after Obamacare, all wage earners pay DEARLY to provide subsidized healthcare and drugs for the jobless and the terminally ill. I actually had to quit my job because I was paying so much for healthcare I was almost financing two more families on my own. If you make GROSS say $70k a year and have no kids, dude, you are fucked in the ass by the State, the Feds, Health Insurance, etc. You're take home is less than $50k after all is said and done. And right now, if your take home is only $50k to $80k a year - gooooood luck finding a decent home to afford. 

 

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The answer is simple: Money. Many of us don't have much. For tons of people, just having enough money for essentials is difficult enough and immense house payments without any of the security that comes with apartments and such. I always thought apartments, low income ones especially, are really nice to have. This country is a dumpster fire right now and it makes things tricky.

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4 hours ago, Jon the VGNerd said:

I can't help but notice majority of people still renting houses/apartments and not actually buying them, unless landlords care more about money than their well-being of others or if majority of houses, even smaller ones, only cater to the rich and not the poor or the well-off. And this is directed in the good ol' USA where houses and apartments have gotten ridiculously expensive, I'd have to wonder why prices keep going up instead of down, and people just dumping money on renting, rather than buying altogether unless high-paying jobs don't actually pay well and often give their employees abysmal salaries, especially since their funds end up going for food, bills, and other necessities.

Is anyone still paying rent on houses/apartments in the US, rather than just buying them altogether?

(This question is for those living in the US, thought he same might apply outside of the US, like Canada, Australia, or even Europe, including the UK, in case anyone wonders.)

Really its a multi-fold issue. People are more transient today than ever before. If you buy that is only a good investment (because of closing cost, insurance, inspection and all that jazz) if you remain in the house for at least 3 years preferably longer. With renting you can be out and somewhere else yearly or even less. 

With our fast paced credit card society it is difficulty for many people to save money. Even if you have a high paying job you probably spend the majority of that money on a credit card before you even get your pay check. Then fail to put things in savings, cause you know, you need that new car now and you have a job that can afford it. Since most people do not sit on 10 to 20k in their savings they never have enough for the down payment. 

I had another thought but Forgot it, if I remember I will edit it in. 

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36 minutes ago, Mirage said:

To @Denim&Venom's point, many things contribute to it.

I'll also add:

The sub-prime bubble demolished home ownership as a norm. Bank bail-outs and stupid low 30 year bond interest rates inflated the prices. (agents don't sell houses based on the price of the house, but on the monthly payment...so when money is cheap to borrow, then they can ask more for the total cost).

Total loss of financial security. 911 changed our culture dramatically. We've experienced 3 or 4 severe and frightening recessions since, and the middle class has never recovered with earnings.

Pensions and Healthcare are gone. When looking at a 15 or 30 year commitment to a loan, it just doesn't make any sense when you have to pay for your retirement and healthcare now. 30 years ago, nobody ever worried about retirement or healthcare. Even just a decade ago, I only paid $90 a month for a family of 5 with a $500 deductible. Last year I was paying $212 A WEEK - with a $3000 deductible per family member! Anyone want to know why Trump got elected?

Healthcare. Our healthcare system has been on the brink for a while, but after Obamacare, all wage earners pay DEARLY to provide subsidized healthcare and drugs for the jobless and the terminally ill. I actually had to quit my job because I was paying so much for healthcare I was almost financing two more families on my own. If you make GROSS say $70k a year and have no kids, dude, you are fucked in the ass by the State, the Feds, Health Insurance, etc. You're take home is less than $50k after all is said and done. And right now, if your take home is only $50k to $80k a year - gooooood luck finding a decent home to afford. 

 

I agree with the insurance. A decade ago I had a city job with zero dollars premiums, and now I pay $1100 a month!!! I will be the first to admit that we bought at the perfect time at the right circumstances and with familiar support. If I was outside of New York City, I could buy on my family's wages again, but not here and now. If we had to pay rent and insurance payments, we'd be screwed over. 

Just now, Sunlight Glisten said:

With our fast paced credit card society it is difficulty for many people to save money. Even if you have a high paying job you probably spend the majority of that money on a credit card before you even get your pay check. Then fail to put things in savings, cause you know, you need that new car now and you have a job that can afford it. Since most people do not sit on 10 to 20k in their savings they never have enough for the down payment

That's a major issue which hopefully will be addressed in schools or something. It's a major societal flaw; we have everything in abundance, but also want it all in a whim without any personal budgeting, financial prowess, etc. I have friends who have every gaming system and every game, and wonder why I buy a game every two years. I have  quite a bit in savings and they're in debt. 

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I would generally prefer buying, but a lot of people are not yet where they want to permanently settle and buying would become more than they want to deal with. I rent an apartment in a busy area and couldn't afford to buy anything here even if I was inclined to (even though my apartment is no bargain).

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Unless you have a ton of cash to throw around you ether paying the apartment by monthly bill or the equialy expensive house bills which are also based on the location of the house itself. 

Edited by R.D.Dash
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People think they don't have enough money to buy a house or at least get a loan, so I guess they think it's "cooler" when they pay rent with some friends.

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I haven’t seen FICO scores yet. That’s actually one of the biggest reasons for millions of people who want to buy a home. Yeah you can probably get a mortgage with a 600 FICO, but your payments might price you out even if you have the down payment. I actually advise people NOT to buy a home until they credit score is well over 700. 

 

 

FWIW I just sold my house not that long ago and am renting at the moment since I want to be able to more easily move. When I find that new spot, I’m definitely buying again. 

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23 minutes ago, Sondash Studios said:

People think they don't have enough money to buy a house or at least get a loan, so I guess they think it's "cooler" when they pay rent with some friends.

Or maybe, and this is just a crazy idea, people actually don't have enough money?

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