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If your American dream involves homeownership, you might have to keep fantasizing for a little bit longer.
In many cities, you’re more likely to rent than to own your home, according to a recent Bloomberg report.
In 52 of the nation’s 100 largest cities, the majority of residents are now renters, Bloomberg reports, citing U.S. Census Bureau data compiled by real estate brokerage Redfin for Bloomberg.
In 21 of those cities, there has been a shift from majority owner to majority renter since 2009. They include:
- Columbus, Ohio
- New Orleans
- Knoxville, Tennessee
- Birmingham, Alabama
- San Diego
- Sacramento, California
- Madison, Wisconsin
As of 2015, these cities’ homeownership rates ranged from 43.6 percent (Atlanta) to 48 percent (Pittsburgh).
Explaining the trend
The trend of declining homeownership rates is expected to continue. A 2015 study by the Urban Institute projected rentership rates would continue increasing into 2030.
Bloomberg cites several factors fueling this shift, such as:
- The foreclosure crisis: In the wake of the crisis, homeownership rates fell steadily for a decade, turning millions of owners into renters.
- Housing shortages: Tight housing markets make it harder for renters to become owners. Redfin recently reported that February marked the third consecutive month that home inventory fell by double digits, and the 17th consecutive month to see year-over-year inventory drops.
- Demographic shifts: These include millennials moving out of their parents’ homes, baby boomers downsizing into rentals and a growing Hispanic population.
Bucking the trend
This doesn’t necessarily mean you should give up on the dream of owning a home. But it does make it all the more important that you save and spend as wisely as possible.
Depending on your current financial situation, the stepping stones to homeownership might include:
- Tracking your expenses and budgeting.
- Getting out of debt.
- Staying out of debt, including creating an emergency fund.
- Finding and opening an interest-bearing savings account.
- Saving enough money for a down payment, if not more.
- Cleaning up your credit.
- Doing your homework on mortgages before shopping for a home.
In the meantime, also check out “10 Ways to Save Big on Your Next Rental.”
What do you make of the shift from owning to renting? Share your thoughts below or on Facebook.