Joshua Brockman posted an article on NPR.org recently that examines the wisdom of renting instead of buying a home during this economic recession. While the housing market is in a slump, consumers looking for homes and the Obama administration are rethinking the tendency to prefer buying over renting.
“With so many homes and apartments on the market, rents are being held down, according to the government’s consumer price index for rent. The CPI inched up just 0.3 percent over the past year-that’s the lowest yearly increase since the late 1940s,” according to Brockman.
Mark Obrinsky, chief economist for the National Multi Housing Council, says that “when the economy recovers, he expects to see a rebound in demand for apartments and rental houses. That’s because tighter lending standards will make it tougher for people to buy homes.”
The Obama administration will probably focus more on renting during the next few months. Quite a few administration officials have shared their concern that there has been too much emphasis on homeownership. An official reported to NPR that “rentals are better financial options for many Americans.”
The director of Harvard’s Joint Center for Housing Studies, Nicolas Retsinas reports that the federal government is presently trying to decide whether to continue to favor homeownership or “seek a more balanced housing policy, talking more about giving people options, worrying more about whether people have a decent place to live, rather than whether they own or rent.” Retsinas claims that “rent” is no longer a “four-letter word.”
“In the past, you rented if you didn’t make enough money,” he states. “You rented if you weren’t ambitious. You rented if you weren’t sort of smart enough. But as it turns out, as we look in recent years, renting turned out to be a pretty smart thing to do.”
The reason renting proved to be a better option was because renters didn’t end up stuck with mortgages higher than the value of their homes. Renting also offers people the option to move freely in pursuit of employment. Although it is true that renters do not get the same tax breaks that homeowners do, during this faltering economy it may be a wiser way to go.
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