What Does It Mean to Be a Forever Renter? Benefits and Drawbacks to Consider
Today, most talks of real estate center around when and whether renters can purchase their first home. But buying and owning property isn’t the only way to find secure housing and make a smart financial decision. In fact, many renters make intentional decisions not to buy a home. “One of the most common misconceptions about ‘forever renters,’ especially among homeowners, is that they’re ‘throwing away’ their money on rent or that they’re paying their landlord’s mortgage rather than their own,” says Nick Pisano, a data writer for Clever Real Estate. “In reality, those who choose to rent have often made conscious decisions to embrace the benefits of the lifestyle, such as increased flexibility and lower upkeep requirements, trading the likely financial benefits of homeownership in the future for a more stress-free today.” In fact, sky-high mortgage rates combined with inflated home prices and low inventory make renting the smart choice in many cities. “A recent analysis by Realtor.com found that it is more affordable to rent than to buy a home in all 50 of the largest U.S. metros,” says Hannah Jones, a senior economic research analyst with Realtor.com. “This means that in today’s market, households stand to save significantly by renting.” Not only does the forever renter enjoy a certain lifestyle, but they can also make smart decisions to set themselves up for long-term savings. Here, we talk to real estate experts about the pros and cons of the lifestyle. What Is a Forever Renter? It’s common to begin renting as an adult while saving money for your first home purchase. But there’s also a trend in which renters choose to remain renters. “‘Forever renters’ are those who’ve decided, either as a matter of preference, due to financial issues, or for other reasons, to forgo the idea of ever owning real estate and instead orient their lives toward renting instead,” Pisano says. Some forever renters choose the lifestyle from the jump, while others have fallen into it after seeing how high the barrier to the housing market has become. “Someone may choose to be a ‘forever renter’ because they live in a high-priced area in which they are unlikely to ever be able to afford homeownership, or because they enjoy the flexibility renting allows,” Jones says. “Lifestyle and finances are likely the two largest considerations for ‘forever renters’.” Agent Robert E. Elson of Coldwell Banker Warburg says it’s not a bad thing to be a forever renter, even if that means you’re fundamentally opposed to homeownership. “Many people like this lifestyle because it may give them options homeowners do not have—freedom to move around whenever and wherever they choose, skipping major financial obligations like bearing a mortgage, and not having to worry about home repairs and the maintenance of appliances,” he says. Benefits of Renting Forever Like any type of living arrangement, there are pros and cons. And while it’s easy to come up with the perks around homeownership, there are similar advantages for renters. Flexibility “What forever renters sacrifice in home equity, they get back in flexibility. Renting for the long term has both pros and cons,” Jones says. “It takes the pressure off of saving up for a housing purchase, it often means being able to afford to live in areas that would be out-of-budget for buying, and it allows renters to pick up and move as they wish, to some degree. Renters also often get to pawn off the maintenance and upkeep responsibilities to the owner, though likely with varying degrees of success.” Many forever renters choose this lifestyle to avoid feeling tied down. “There is a rather pervasive view that renting is ‘throwing away’ money. However, renting allows for flexibility that homeownership does not,” Jones says. “Renters are able to be nimble and adjust to changing life circumstances, such as losing a job or adding a new member to the family, without having to worry about selling/buying a new house.” That doesn’t mean there aren’t consequences to moving frequently. “Of course, lease terms vary and renters may face the financial consequences of breaking a lease, but generally this cost will be lower than costs associated with selling a home,” Jones adds. “Homeownership can offer peace of mind and stability, but it is much harder to course-correct than it is when renting.” It’s also a great arrangement if you aren’t committed to living in one particular city. “Additionally, not being the actual homeowner likely makes it easier to move and not be tied to a specific location,” says Ann Cooper, a real estate broker with RE/MAX of Boulder. Less Time Spent on Upkeep If you’re someone who travels often or despises yardwork, renting an apartment or a home which the landlord maintains can be ideal. “Even if you’re not a traveling salesperson, there are reasons to rent for the long term,” says agent Michael C. Weiner of Coldwell Banker Warburg. “Some jobs require a lot of changes—think U.S. military personnel—while some people simply like to have a variety of homes in different locations over time.” Fewer Expenses And even though homeownership is considered an easy way to build equity and wealth, it’s not always smooth sailing, and that’s where renting can be advantageous. “Financially, people typically assume that it’s better to own than rent,” Weiner says. “But, buying in a hot market can lead to much less gain over time, and expenses of ownership, including taxes
