Thursday, July 11, 2013

Shift from an ownership to a rental culture

In spite of improvements in the housing market in the last couple of years, the trend away from "homeownership culture" in the US seems to be ongoing. This may be old news for some, but based on the quarterly data from the US Census Bureau, rental vacancies are around a decade low, ...

Source: US Census Bureau

... while homeownership rate is the lowest since 1996.

Source: US Census Bureau

Even though polls still show that Americans prefer homeownership, issues such as large down-payments, risk of housing price declines, and mobility needs are driving more people into rentals. Of course this doesn't mean less demand for housing - just relatively fewer owner-occupied units. Some are suggesting that renting is a cultural phenomenon and it doesn't just apply to housing. A recent article in an influential tech blog talked about the 4 Rs of changing cultural attitudes: "Recycle, reuse, reduce and rent".
Ulitzer: - Think about the phenomenon of the Zip Car and other such companies that allow you to pick up and drop off a car at convenient locations. Use and pay for the car when you need it, instead of paying for a car – and parking space – when you are not using it. Similarly, in big cities around the world, there is the developing phenomenon of renting bicycles to ride from place to place. Ride a bike when and where you want and never have to buy one if you live in one of these cities.
Think about, the web site that allows people to rent out their couches, beds and homes to others, generating revenue. Hundreds of thousands of people have used on both sides of the economic equation, either to generate revenue not previously available or to rent a place to stay at a price lower than a regular hotel room.

Think about all the streaming video and audio sites. They are basically renting content for consumption, not selling content to be owned. They are also allowing one to experience content before buying, which will greatly cut down on the desire or impulse to own. Much of media is – and will – move to subscription models. Subscription is really the renting of content on a monthly basis. In many major categories of purchase, we are becoming less about owning and more about renting
It will be interesting to see whether rising rents and supposed improvements in the labor markets reverse this trend in the next couple of quarters - or if this shift in housing persists. Stay tuned.
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