Own a Home or Rent a Home: New Thoughts on an Old Question
The issue of whether one should buy a home or rent a home is not new.
However, more recent events and investment decisions, with changes in the market as to interest rates, loan qualifications, etc. have placed different perspectives on this age-old question of deciding to buy or to rent a home for personal use.
The US Census Bureau (US CB) has developed some interesting data that bears directly on factors that are important when reaching a conclusion on the “buy or rent” issue.
The following is an interesting depiction of the profile of owners v renters as shown by the study from the US CB and US Department of Housing and Urban Development.
Where one should invest as to rentals or where one should live as to rentals or purchase of a home are issues the US CB examined in some of their recent studies.
Related to these issues, the US CB found:
“According to Home Vacancies and Homeownership data, the Midwest had the nation’s highest homeownership rate (70.3%) in the first quarter of 2023, followed by the South (67.3%), Northeast (62.7%) and West (61.9%).
Homeownership is defined as the proportion of households that are owners.
The homeownership rates, compared to the first quarter 2022, were higher in the West and not statistically different in the Northeast, Midwest, and South.”
Of course, there are many factors that enter the decision as to where one would locate. Family considerations, employment, cost of housing on the rental side and the purchase side of the equation are only a few of the important factors that must be considered when determining where to live, be it by renting or buying a home.
However, as top rental areas, and the area of the US one might consider leasing, the US CB noted:
“Rental vacancy rates were higher in the South (8.3%) and Midwest (7.5%) than in the West (4.3%) and Northeast (4.1%). There was no statistical difference between the rates in the South and Midwest or between the West and Northeast.
The rates in the Midwest and South were higher and the rate in the Northeast lower than a year earlier; the rate in the West was not statistically different from first quarter 2022.”
As to who might choose to rent and who might buy a home, the US CB found the following data that gives some indication of what most homeowners and most renters have chosen.
“The 2021 American Housing Survey provides a demographic profile of owners and renters and the types of housing and neighborhoods they choose.
Most U.S. owners:
Had a home that was a detached, one-unit building (84.3%).
Believed their neighborhood had good schools (92.7%).
Of the 5,380,000 U.S. homeowners planning to move in the next 12 months, 38.3% said they planned to move to a different city.
Had a home in a building with two or more apartments (61.5%).
Believed their neighborhood has good public transportation services (61.0%) and schools (89.3%).
Of the 14,375,000 renters planning to move in the next 12 months, 39.3% said they planned to move to a different neighborhood in the same city.
When looking to the choice of rental or ownership, and relating the same to education, the US CB found:
A bigger share of homeowners (41.6%) than renters (28.7%) had a bachelor’s degree or higher. They also earned more money: median annual household income was $78,000 compared to renters’ $41,000.”
The changing landscape caused by Covid#19, the economy, and many other recent and important events will certainly impact the decision to buy or lease a home; thus, the above statistics may not remain applicable for more current years.
Dr. Mark Lee Levine, Professor, University of Denver