According to a new survey from Freddie Mac, 78 percent of Americans agree that renting is more affordable than owning. That’s a big number, especially when you consider that it’s up 11 percent from just six months prior. So what’s going on? It all comes down to three significant developments in the housing industry.

First, the number of rental properties that are available has hit a three-decade high. That means renters have more options if they decide to rent. At the same time, mortgage rates have risen almost one percentage point since the beginning of 2018, while average income has failed to grow at the same rate.

Couple those recent developments with the fact that the projected numbers for new apartment builds are up to 27 percent, while the number of houses being built is down a third from a decade ago and it all combines to create a situation where long-term renting is quickly becoming the new normal for many Americans.

Is it a bad sign?

It all depends on where you live. In cities like San Francisco, where some argue that Baby Boomers have successfully blocked construction of affordable housing to avoid density in their neighborhoods, it can definitely point to an impending crisis. The shortage of available property means renting is less of a choice and more of a means to an end, if you can even find a temporary place.

Randy Shaw, author of "Generation Priced Out: Who Gets to Live in the New Urban America," points out that San Francisco isn’t the only place feeling the squeeze. Trendy urban cities like Seattle and Austin (and even Salt Lake) have seen rent rise to an astronomical number, with increases up to 150 percent over the past decade. At the same time, the number of affordable properties in desirable areas has gone down, leaving people who have no choice but to rent in a difficult situation. For other people, however, renting is preferred.

Why people choose to rent

A high number of renters can sometimes signal an over-inflated housing market, but it can also mean that renting has become more desirable to young adults who would be the typical property buyers.

In cities where the overall market is a little less grim, research suggests that many people who can afford to buy a house still prefer renting due to lifestyle factors. According to an article from National Real Estate Investor, only around 22 percent of adults under 25 owned a house in 2017 compared to 26 percent in 2005. These renters entered the workforce just as the economy was picking up and they often have the option to buy — but many don’t.

Their reasons mostly have to do with preference. People in their 20s are waiting longer to have families and often prefer to stay in metropolitan areas. They value travel over suburban living, and their remote jobs offer them the opportunity to explore without putting down roots right now. They also may not see buying as their best investment option and prefer to allocate that money elsewhere.

Utah vs. national trends

We wanted to find out if Utah reflects the national trend toward long-term renting, so we did a survey of our own locally. We found that the majority of Utahns still place a high value on owning a home, with 53 percent of respondents indicating that they believe purchasing a home is more affordable than renting.

Historically, inexpensive house prices have meant that Utah skews toward homeownership. Although rent is rising quickly in places like Bountiful and Park City, most Utahns we surveyed still fit the profile of typical short-term renters who are renting to save for a future home purchase; of those surveyed, almost 70 percent plan to own a home soon.

What do you think? Is renting becoming the new norm or do you still plan on buying a home?

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