Joe Raedle
- Median asking rents in the US just recorded their largest annual decline since 2020.
- High mortgage interest rates and house prices have made buying a home untenable for many Americans.
- With homeownership out of reach and rents expected to soften, now's the perfect time to be a renter.
The American Dream in 2024? Being a renter.
Think about it: Renting requires a smaller upfront payment. There's no navigating high interest rates. You've got the freedom to up and move. And when the roof leaks, it's someone else's responsibility — let the landlord take a hit to their wallet.
Americans, it seems, are slowly starting to realize that owning a home isn't necessarily better than renting. Rental-listings site Zumper found that more than half of the over 7,600 renters it surveyed believe that "the new American Dream" is not tied to the financial ball and chain that is homeownership. The same survey, Zumper's annual rent report, found that 73.8% of renters do not think now is a good time to buy a home.
Worries about a looming recession, people being more conscious of what they're spending on, and the pervasive feeling of being locked out of the housing market have tinged Americans' attitudes towards homeownership with pessimism and defeatism.
The shift towards renting could be permanent, Zumper CEO Anthemos Georgiades said.
"The new math behind the decision to rent or buy has been well documented, but this isn't a temporary shift that'll reverse once interest rates come back to earth," Georgiades said in a statement. "Renting a home is now widely considered a viable and appealing option for all types of Americans."
Zumper found that the national median rent for a one-bedroom is down a tenth of a percent from this time last year, to $1,496 a month. Rent prices in 55 of the 100 cities Zumper tracks are down in the same period of time, while prices in 17 of them are flat. Redfin found that US median asking rents declined 2.1% in November from a year ago, the largest annual decline since February 2020.
This, however, doesn't hold true in all corners of the country. Zumper found that, in particular, some midwestern markets saw an uptick in rents as many folks moved there in search of affordability and quality of life upgrades.
The numbers for purchasing a home are grim. It's 52% more expensive than renting nationwide, Zumper said, the widest gap on record. Even with mortgage interest rates lower right now than they were earlier this year, it's still more expensive to buy.
Take this example from the Wall Street Journal, which this week declared in a headline that the math for buying a home no longer works. Before the Fed started raising rates in March 2022, a person with a $2,000 monthly budget could afford a home valued at more than $400,000. Now, with rates around 7%, that same buyer would need to find a home valued at $295,000 or less.
Remember that the typical home in the US cost $406,900 in the third quarter, according to the National Association of Realtors. No wonder over 38% of renters surveyed by Zumper never plan to purchase a house.
Renting can be considered easier for a number of reasons. Zumper noted a record number of multifamily apartment buildings are opening across the country, flooding the market with supply that could continue to push rents down and put a little more bargaining power in tenants' hands.
When landlords are trying to fill apartments with tenants, they tend to be open to negotiating. The number of listings on Zumper's platforms with rent discounts has jumped 17% compared to the summer. So now's the time to negotiate for that lower monthly rent or refuse to pay a broker fee.
Let it be known: 2024 is the year of the renter.