These days, the “American Dream” is no longer a universal idea; it means different things to different people. In previous decades, the American Dream meant doing better than your parents, which can include buying a home. But today, owning property isn’t necessarily everyone’s immediate goal.
During the Great Recession, between 2007 and 2014, 7.3 million consumers lost their homes, according to RealtyTrac. With so many families affected by this loss, it is no surprise that in recent years the home ownership rate has fallen from 69 percent in the early 2000s to 63.7 percent at the beginning of 2015, according to the Washington Post. As home ownership has declined, the 2010s are on track to see the fastest growth in renters in history.
In the Ohio Credit Union League’s 2017 Consumer Survey, 25 percent of all respondents do not own their home, and only 8 percent of all respondents are planning on buying a house in the next year. A CityLab article recently reported that renting is increasing nationally across an array of demographics, including age and income bracket. This indicates people are renting because they choose to, not because it’s their only option.
Some consumers want more flexibility and don’t want to be locked into a mortgage when they might want to leave in a few months or years. Some don’t want the responsibility of maintenance and shouldering costs of homeownership, and would rather rely on landlords to handle. To others, choosing a location, even if they can’t afford to buy a home in the desired area, is the deciding factor, and they are willing to forego ownership to live exactly where they want.
As for how Ohio consumers make their housing decisions, 67 percent of survey respondents said location plays the biggest role, followed by 23 percent who consider monthly rent or mortgage payment to be the most significant factor. The size and layout were the most important consideration for 10 percent of respondents.
So, will you put off those big life purchases or remain a mainstay of the American Dream with homeownership? For those weighing renting vs. buying, here are a few things to consider about where you want to live.
• Short-term future: Think about the lifestyle you want to live. If you’d like to stay in a place for at least five years and have enough savings to make a down payment, buying a house may be the best choice. Use a home affordability calculator to crunch the numbers.
• Consider the details: Moving to a new home isn’t just about the building where you’ll be living. Think about the neighborhood: what stores, shops, and restaurants are nearby? Is your new home close to public transportation? If you have kids, what sort of schools does the area have?
• Be prepared: Check your credit score and history before you look for a new place. If you’re going to rent, get renter’s insurance. If you’re going to buy, get pre-approved financing to ensure a smooth closing process. Fully understand the terms of your lease or purchase agreement.
• Take your time: Avoid waiting until the last minute to decide where you’ll be living next. Knowing what’s available in your market will help you choose well and save the trouble of moving again shortly.
ProMedica FCU will be hosting a home buyer seminar in the near future. Please keep a look out for dates and times.