Au Contraire Mon Frere
An article in today’s Wall Street Journal proclaims that renting is the new American dream. Sadly, there is some confusion within the title of the article. The dream remains home-ownership, yet renting remains the reality. Evidence of this dream is represented by the hundreds of thousands of homes in foreclosure and those that have been foreclosed on in recent months.
Dreams carry us humans through what can sometimes be a mediocre reality and serve as the ultimate destiny or resting point. As such, when the dream appears to be more feasible or attainable, dreamers try to grasp and realize the dream. In recent years, the sub-prime mortgage helped, if not temporarily, hundreds of thousands of individuals and families achieve this dream. As many of these sub-prime borrowers were first time homeowners, they opted to progress from renting to owning.
There are benefits to both. Renting is more affordable and yields the opportunity to save money. Buying is typically more expensive and yields the opportunity to make money by either renting the property out or by selling it for profit in either the short or long term. At present, financing is difficult and many remain priced out of the market. However, rents have decreased in the Orange County area by as much as 4% over the past 12 months. Simple math tells us that a $1,000 monthly rent, reduced by 4% over the past 12 months equals a new monthly rent of $960. With the for sale market suffering even greater declines in values, there are a number of homeownership dreams being realized in the current marketplace.
No dream is easily achieved. That said, those who are currently saving money to go forward with their purchase or those who are in the process of making a purchase are equally fortunate to be making key steps towards the achievement of their goals. Those who are renting, well, consider them making the first step towards this very same goal. However, do not mistake renting to be the dream, it is a mere part of reality.