In housing slump, more opting to rent
For the first time in the U.S. since the 1980s, it’s cheaper to buy a home than it is to rent. You’d think that would be cause enough for bargain hunters to buy up cheap, undervalued properties, but according to Aaron Galvin, the owner of Luxury Living Chicago, many would-be homeowners have hesitated. “People still don’t think they’ve seen the bottom,” he said.
Local numbers certainly bear that out. More than half of homes sold in the Chicago area are sold at a loss. With prices so low, ownership is no longer the cash cow it was in the boom years. In an anemic economic recovery, many Americans don’t know where they’ll be in five years, let alone the ten or more it would take to sell a home at a profit. Banks, burned from the foreclosure mess, are reluctant to loan.
Given the risks of home ownership, renting is no longer just the province of young people and the poor. Galvin, who focuses on upper income neighborhoods like Chicago’s Streeterville and the Gold Coast, says it's not uncommon for him to get 30 to 40 phone calls a day from people asking for advice on whether to rent or buy.
With more and more Americans delaying or eschewing home ownership altogether, Dennis Rodkin, the Deal Estate columnist for Chicago magazine, sees another worrisome trend: rising rents. “There’s a dearth of affordable rentals,” he said. Scarcity will likely intensify, as developers cater to the growing luxury rental market.
On Monday's Eight Forty-Eight, Galvin and Rodkin break down the pluses and minuses of renting and buying in today’s market. To share your story live, call 312.923.9239.