The United States is on the brink of becoming a country of renters, with alarming trends and factors pointing to a bleak future if careful and deliberate steps are not made to assist homebuyers, particularly first-time home buyers, especially.
People who currently own a home can usually sell their home and use the equity in their home as a downpayment towards their next home. This saves them money in the long term on the new home, because they can qualify for a lower interest rate and avoid private mortgage insurance. This can save thousands of dollars over the life of the loan.
“America Should Become a Nation of Renters”— Karl W. Smith, Bloomberg
An article by Karl W. Smith in Bloomberg on June 17, 2021, declares, “America Should Become a Nation of Renters: The very features that made houses an affordable and stable investment are coming to an end.” Mr. Smith is of the opinion that the American Dream is in need of revision. He believes that the American Dream should be about new frontiers and new experiences and not about owning a home. Renting from corporations is increasingly becoming the more accessible option for more people.
The coronavirus pandemic has significantly impacted the housing market. House flipping and residential real estate investing have risen to historic levels. According to real estate data firm, CoreLogic, “Investors made 28.1% of all single-family purchases in February of 2022, a record high according to CoreLogic’s data that goes back to 2011.”
Housing data by the US Census Bureau is showing that homeownership rates in the US have been plummeting over the past few decades. On the other hand, rental rates have been skyrocketing.
According to the US Census Bureau, the homeownership rate in the US hit a record low of 65.6% in Q4 2021, down from its peak of 69.2% in 2004. Meanwhile, the rental vacancy rate dropped to an unprecedented low of 6.2% in Q4 2021, down from its peak of 10.6% in 2009. These are clear indicators that Americans are losing their grip on homeownership.
To make matters worse, rising home prices, stagnant wages, and a lack of affordable housing in some areas have made the American dream of owning a home almost impossible. The harsh reality is that homeownership is becoming a privilege of the increasingly wealthy few, leaving a significant majority of Americans with no choice but to rent.
The COVID-19 pandemic has added fuel to the fire, exacerbating the crisis in the housing market. Experts predict that the pandemic may accelerate the trend toward renting, with many people forced to move out of their homes due to the economic fallout of the pandemic. This has led to an unprecedented surge in rental demand, creating a landlord’s market that is driving up the cost of rent to unaffordable levels.
The future looks bleak for the American middle class, with the dream of homeownership slipping away. If this trend continues, the US could become a nation of renters, where the majority of people are at the mercy of unscrupulous landlords, facing the constant threat of eviction and homelessness. The time to act is now before it’s too late.
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