Every real estate market is different. Living in Chicago is much different than living in Phoenix. We have different housing needs, costs of living, and about a dozen other factors. When it comes time to renew that lease or make a move due to a job etc., you’ll have to weigh your options whether to buy a home or rent your next place. As every city is different, and every resident has different needs and goals, it’s important to know the facts before making that financial decision.
Economists in every state collect absurd amounts of data on the real estate market of each given city on a monthly, quarterly, and yearly basis. For example, the Arizona State University’s W.P. Carey School of Business publishes a full report analyzing statistical data in the Phoenix market as well as full market analysis of the psychology of residents. Typically these reports are between 15 and 20 pages long and are incredibly intense. Alongside the in-depth reports released by the Government housing agency, Fannie Mae offers a serious incite into the rent vs. own debate.
The Rent-Check Quotient released for the month of July 2012, found that for every 100 homes sold in Phoenix, 50 families chose to rent an apartment or from a private landlord instead. Only 50% doesn’t sound that significant, right? As it turns out, of those 100 homes sold, 32 were sold to investors intending to immediately lease out the home to private renters. This quantity of renters vs. owners hasn’t been this high since the late 1920’s (national numbers)!
In Phoenix, the price to buy a home is really low so you would imagine purchasing a home would be fairly tempting. So why exactly are there so many more renters these days? Frankly, all Americans, and Arizonians in particular have taken a solemn slap to the face regarding the outlook on homeownership.
Gone are the days of a home as a retirement investment. No more can you bet that monthly mortgage payments are building any sort of equity. Renting has taken on a new meaning to Arizonians; it’s financially more reliable, it allows for flexibility, and though renters can’t treat their home as a savings account for future cash out, neither can homeowners. According to an in-depth survey by Fannie Mae, 30% of current homeowners would actively elect to rent rather than buy ever again. That’s a huge statement!
These same expert economists project that by the end of 2013, there will be 20% more renters than there were in 2011, just right here in Phoenix! The mentalities of Arizonians have shifted; why take the risk of taking on massive amounts of debt when short-term commitments are readily available?
It’s a great question to ask before you commit to buying or renting your next place. Why does renting benefit you over buying a home?