In recent years, ownership has taken a backseat as more Americans are opting to rent various items, ranging from cars and apartments to clothing and furniture. The rental industry has expanded and now includes a wide array of products, such as power tools, musical instruments, designer handbags, baby gear, and even funeral caskets. According to a report by Intuit Credit Karma, 28% of adults regularly rent goods and services, a number that jumps to 47% when housing is factored in. The shift towards renting is driven by affordability concerns and a growing preference for a “rent-first” lifestyle.
Apart from financial constraints, over half of the adults surveyed see the value in renting due to its flexibility and ability to prevent overconsumption, a concern that is particularly prevalent among millennial and Gen Z adults. Renting allows individuals to adapt to their changing needs and lifestyles without the commitment and burden of ownership. Certified financial planner Carolyn McClanahan points out that while renting can be a great option for many, it is essential to weigh the costs and benefits. Renting clothing for special occasions can be cost-effective, but owning a few versatile pieces may offer long-term value and savings.
When it comes to big-ticket items like cars and homes, the decision to rent or buy becomes more complex. While leasing a car may offer lower monthly payments, financing a purchase with an auto loan often results in lower long-term costs, especially for individuals who keep their vehicles for an extended period. Owning a car allows for building equity and avoiding mileage limitations and wear-and-tear charges that typically come with lease agreements. Similarly, when it comes to housing, renting might be a more sensible choice, particularly in the early stages of settling down. McClanahan advises renting unless you are certain about your long-term plans and stability in a specific location.
Millennials, known for delaying marriage and family planning, are reshaping the housing market by considering renting as a viable long-term option. The flexibility of renting allows them to explore different living arrangements and job opportunities without being tied down by homeownership. Dottie Herman from Douglas Elliman acknowledges this shift, noting that owning a house is no longer a top priority for many millennials. Renting offers the freedom to move and adapt to changing circumstances without the commitment and financial burden of owning a property.
Despite the benefits of renting, for some Americans, especially younger adults, renting is not a choice but a necessity. High mortgage rates, housing shortages, and affordability issues have made homeownership out of reach for many. An overwhelming majority of aspiring homeowners cite affordability as their biggest obstacle, underscoring the challenges in today’s housing market. Michael Krowe from Edelman Financial Engines advises against rushing into a home purchase based on speculation or societal pressure. Renting may be a more viable option in certain situations where buying may not make financial sense, allowing individuals to live within their means and avoid unnecessary financial strain.