The Number of Renters Reaches a 50-Year High — but Should You Buy Instead?

The Number of Renters Reaches a 50-Year High — but Should You Buy Instead? Photo by Monkey Business Images / Shutterstock.com

The share of households that rent rather than own is at a 50-year high.

As of last year, 36.6 percent of households in the U.S. rent their homes, according to a recent report from the nonprofit Pew Research Center. The report is based on U.S. Census Bureau data.

The 2016 high surpasses the peak reached in 1986 and 1988 (36.2 percent), making it the highest share of renters since 1965, when the figure reached 37 percent.

Pew attributes this trend in part to lingering effects of the housing market crash. As we explain in “To Buy or Rent? How to Find the Answer to That Million-Dollar Question”:

“Gone is the conventional wisdom that buying a home is a surefire investment that every sentient being should pursue. The Great Recession was a harsh reminder that the housing market can decline, even plummet.”

That is in line with Pew’s finding that, over the past decade, rental rates have risen among groups that are historically less likely to rent — whites and middle-aged adults, for example. Rental rates also have climbed among demographics that are historically more likely to rent — such as young adults, nonwhites and people with less education.

Many renters — about 65 percent — say they rent due to circumstances rather than choice (cited by 32 percent), Pew found. A majority of renters cited financial reasons for renting, and 72 percent want to buy a home at some point.

A recent survey by real estate website Trulia found that the biggest regret among renters today is their decision to rent rather than buy a home. See “Why Many Owners and Renters Regret Their Home Decisions.”

David Weidner, managing editor at real estate data website Trulia, tells CNBC:

“One thing our research has found is that people can sometimes be a little too cautious. In every U.S. major market, it’s cheaper to buy a home than it is to rent over seven years. And it’s really not even close.”

Owning vs. renting

Just because owning a house might be cheaper than renting in the long run doesn’t mean you should run out and buy a house. That’s especially true right now, as the current real estate market is a seller’s market.

Additionally, regardless of whether financial reasons affect your choice between renting and buying, there are other factors to consider.

Even for retirees, homeownership doesn’t always make sense. An analysis this spring found that that it’s often cheaper to rent rather than to buy a home for retirement, unless you want to pass down home equity as an inheritance.

What most affected your decision to rent or own your current home? Share with us below or on our Facebook page.

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