YOUR MONEY-Many renters just say no to buying homes
(The writer is a Reuters contributor. The opinions expressed are his own.)
By Chris Taylor
NEW YORK Jan 27 (Reuters) - With a wife and a 10-year-old daughter, Matthew Amster-Burton appears to be one of the likelier people to buy a house, but the Seattle food writer says he has no interest in doing so.
"It does feel weird sometimes, because it's supposed to be the grown-up thing to do," says Amster-Burton, 38. " ... But it's really not my goal, and it does seem like I'm swimming against the tide sometimes."
Amster-Burton is part of a population of diehard renters that is growing as the rate of U.S. homeownership drops. There was a net loss of 162,000 owners between 2011 and 2012, according to the 2013 "State of the Nation's Housing" report from Harvard University's Joint Center for Housing Studies.
This is going on despite housing's impressive recent performance. The Standard & Poor's/Case-Shiller 20-city home price index, for example, jumped 13.6 percent in the year that ended in October.
But professional investors are doing most of the buying, says Gleb Nechayev, senior managing economist at Boston-based research firm CBRE Econometric Advisors. Individuals apparently have not reached the same comfort levels, and it is not clear when they will.
Chicago-based trade group National Association of Realtors forecasts renter households will increase by 5 million to 6 million over the next decade from the current level of just below 40 million.
Some people have no choice but to rent. Purchase prices once again have risen out of reach for some, and banks have been stingy in their lending practices after the housing market crashed following its 2006 peak.
Other people are avoiding homebuying for emotional reasons. The housing bust wiped away trillions in home equity, leaving many owing more than their houses were worth on the market and causing a number of people to wonder whether housing was actually a wise long-term investment.
"That trauma of having lost their homes, or watching relatives or friends lose their homes, has certainly had an impact," says Nechayev. "Especially on the decisions of younger households and, in particular, first-time homebuyers."
For Amster-Burton, witnessing the last bust was so harrowing that he does not want to risk going through one himself. While he does not rule out the possibility of buying a home someday, he is not going to consider it anytime soon.
"This idea that homeownership is automatically a financial win is perplexingly unexamined," he says. "When you sit down and do the math, you often have to make unrealistically optimistic assumptions in order to come out ahead - including staying in that same home for a very long time."
According to CBRE's numbers, he may be making a smart financial decision. Given the average costs of renting versus buying, it often makes more sense to rent in high-cost places like Seattle; San Jose, California; San Francisco; Portland, Oregon; and Denver.
In other cities, such as Orlando and Tampa, Florida; St. Louis; Atlanta; and Chicago, a renter often might benefit from becoming a homeowner.
But there are diehard renters in relatively affordable areas, too.
Katlin Pickering, a 29-year-old analyst at the corporate office of a natural grocery store in Asheville, North Carolina, used to own a single-family home. She decided it was not for her, and now she has zero interest in doing it again.
"It just doesn't make any sense to me," says Pickering. "I don't want to put myself in debt, I don't want to spend all my time and money fixing a home, and I don't want to be stuck in one place.
"I'm perfectly content being a renter." (Editing by Beth Pinsker and Lisa Von Ahn)