Design your life to include more money, health and happiness with less stuff, space and energy.

Design your life to include more money, health and happiness with less stuff, space and energy.

Can the American Dream be Rented?

For many years, the American Dream has centered around home ownership. The logic follows that you buy a home, lay roots and live in your biggest investment, which, more often than not, appreciates in value.

In the last few years, this dream has become a nightmare. The mortgage crisis created a class of defaulters, and the ensuing recession made down payments and financing near-impossibilities for most. Moreover, our mobile job market made the tether of a home more of a liability than asset.

According to a Wall Street Journal article by Daniel Gross called “Renting Prosperity,” these factors have triggered a shift away from the ownership ideal. He says:

In the American mind, renting has long symbolized striving—striving, that is, well short of achieving. But as we climb our way out of the Great Recession, it seems something has changed. Americans are getting over the idea of owning the American dream; increasingly, they’re OK with renting it.

The facts bolster his argument: home ownership is down, while rentership rises; and multi-unit buildings–most of which are used for rentals–have increased in production over the last few years while single units are declining.

He also explains that for many, the idea of ownership is mostly that: an idea. The reality is that people simply rent from the banks, whose “rent” comes in the form of interest and fees. This begs the question, if there is little, no or negative cost benefit to owning, why do it?

We’re big fans of rental/sharing services such as Zipcar and Rent-the-Runway. They allow you to use products by the hour, rather than paying a hefty and often unnecessary retainer fee. The author Gross points to these services as indicators of a changing attitude to rentership–that people increasingly care more about using than owning. The question is whether this a good system for housing, which for most is something they want to have all the time.

Like cloud computing, where all data is stored online and accessed when needed, could our world be moving away from the model of all-the-time ownership to on-demand access? On the one hand, this could lead to fewer people laying roots and improving their communities. On the other hand, it could lead to smarter rental homes and renters–the Strand East planned community is a good example of that.

What do you think? Do you think we should be living in the cloud or on the ground?

via Wall Street Journal

  • David,

    It’s so good to read someone (you) who actually thinks. Your re-framing of paying rent to banks, so be it under the term mortgage, as rent paid to banks. Now that’s a truth many real estate professionals will take umbrage with. But real estate professionals as a group may have to face a teensy bit of vested interest.

    By the way, approximately 2500 licensed real estate agents leave the business every month according to the California Association of Realtors (CAR). I note that the always positive spinning  National Association of Realtors, (NAR), splashes headlines proclaiming the end of the crises, when even sub-micro movements in the market increase….all of one eighth of one percent. Somewhat like the new-hire believing they’ve arrived when their paycheck increases 27-cents a month.

    An economist from Columbia University said during his interview in response to the astonished questioner, that the he could not agree with the questioner’s statement that it’s hard to understand details of the purchase and mortgage agreements. The professor said he had never owned a home because he did not want to.

    The economist then cooly dropped a bomb, he felt Americans have been sold a “bill of goods.”  The American dream was defined, he said, as owning your own home, instead of owning your own life. The latter meaning, of course, working on being a fully realized human being.

  • Ani

    This is a timely article for me as I’m starting to rethink my ideas about home ownership. The notion of living in an apartment where the maintainance is performed by others and I can spend my free time doing what I want and NOT mowing the lawn and doing home repairs grows more enticing by the day. I have so little free time and I don’t find the work i have to do on my home enjoyable. I’d also like to have more flexibility to move if I need to. My job ends shortly and I have no idea if i can sell my home if I need to relocate. What I do like about home ownership is being able to paint walls whatever color I want and that sort of thing so more fliexibility in this area would sweeten the idea of renting to me.

  • brain_up

    There’s a groundswell movement towards borrowing from family and neighbors to finance home purchases. This movement into Self Directed mortgages allows people to choose their own interest rates and keep the money in the family/community. There will be an impact on bank profits as this accelerates and more people decide to avoid the bank ‘offers’.