Housing has now gone full circle. President Bush’s “Ownership Society” has morphed into the “Rentership Society”. The attitude applies to more than houses as noted in the Wall Street Journal article Renting Prosperity by Daniel Gross.
Americans are getting used to the idea of renting the good life, from cars to couture to homes. Daniel Gross explores our shift from a nation of owners to an economy permanently on the move — and how it will lead to the next boom.
In the American mind, renting has long symbolized striving — striving, that is, well short of achieving. But as we climb our way out of the Great Recession, it seems something has changed. Americans are getting over the idea of owning the American dream; increasingly, they’re OK with renting it. Homeownership is on the decline, and home rentership is on the rise. But the trend isn’t limited to the housing market. Across the board — for goods ranging from cars to books to clothes — Americans are increasingly acclimating to the idea of giving up the stability of being an owner for the flexibility of being a renter. This may sound like a decline in living standards. But the new realities of our increasingly mobile economy make it more likely that this transition from an Ownership Society to what might be called a Rentership Society, far from being a drag, will unleash a wave of economic efficiency that could fuel the next boom.
The reaction to extended leverage and foolish borrowing isn’t to stop consuming and buying; it is to consume and buy more intelligently. That’s what the Rentership Society is all about. And it starts at home. Literally. Housing is the biggest single component of consumption in the U.S. economy and the source of much of our present misery. According to the Bureau of Labor Statistics, the typical consumer spends about 32% of his or her budget on shelter. In the last decade, that generally meant borrowing a lot of money to take “ownership” of a home.
For an increasing number of Americans, though, it simply makes more sense to rent these days. According to Moody’s, by late 2011 it was cheaper to rent than to own in 72% of American metropolitan areas, up from 54% a decade ago. And the more people who do it, the more socially acceptable and desirable it becomes. The decline in the ownership rate means that about three million more households rent today than did at the height of the bubble.
Zipcars and College Textbooks
Gross points out that students are increasing renting books as opposed to buying them. Of course there are also Kindle and other electronic ways of purchasing or renting books as well.
The same holds true for cars, and not just long-term leases either.
Gross writes …
To Read More CLICK HERE
