For generations now, our national values have placed an emphasis on home ownership. Renters were the people who were rootless or just not being quite ready to "settle down." As home ownership has become less of a financial asset and more of a liability over the last few years, there has been a shift in the very fabric of what renting means in our society.
We predict that in 2011, the demographics of who rents will continue to change, along with the place renting has in our social values system. The tools renters have at their disposal will evolve in kind.
The American Dream Will Include Both Renting and Owning
Used to be, renting was widely viewed as the last resort option for getting a roof over one's head, or as something people did until they had enough maturity, life stability, job stability, income, the credit score and/or the savings to qualify for a mortgage or afford to buy a home. In 2011, though, renting-by-choice -- i.e., renting by those who can afford to buy -- for years, or even permanently, will stop being a dream deferred.
With millions of Americans having experienced the loss of tens or even hundreds of thousands of dollars in equity in the recent housing crisis -- and some actually losing their retirement savings and homes themselves -- renting will shed any remaining stigma next year. In fact, some who rent by choice will see their decision respected as going against the herd mentality that favors home ownership at all costs. For others, renting will simply be a simultaneously smart and liberating financial decision shared by a growing segment of Americans of all ages and socio-economic strata.
Renting will trade out its outdated assumptions for some new connotations next year. Americans will not, in the foreseeable future, widely disdain home ownership, by any means. However, renting will take on new meaning, with new implications of enhanced mobility across the country and the flexibility to pursue career opportunities wherever they arise, as well as the fancy-freedom from mortgage concerns and maintenance burdens of owning a home.
Lifelong Renters Will Begin to Buy
Home values are likely to continue a decline in most markets in 2011, with a few exceptions. As jobs grow, prices hit bottom or move past their bottom in the handful of appreciating markets, and interest rates start what is likely to be a long, volatile climb up from the all-time lows of 2010, extreme affordability will push even some lifelong renters off the fence and into the market. These are the folks who have lived in rent-controlled apartments for decades. The folks who, when relatives asked why they weren't taking advantage of the low housing prices of 2008 (and 2009, and 2010), replied that prices were still too high. Large numbers of these people will perceive that this once-in-a-generation window of opportunity to buy a home with such low prices and rates might be closing in 2011, and will convert to home buyers, en masse.
Lifelong Owners Will Begin to Rent
Baby Boomers who have owned homes for decades and lost them at the trough of the job and housing markets will become renters-by-choice, even after their years-long, post-foreclosure waiting period to get a new home loan has passed. Retirees will rent their current homes, rather than selling them, move to warmer climes and rent instead of own their retirement homes, at least until the housing market stabilizes and the mortgage market relaxes. Unemployed and/or upside-down homeowners will walk away from their homes and rent, to escape the burden of negative equity and gain the ability to move around the country in pursuit of good jobs. Renters, they are a'changing.
The Next Generation of Online Tools for Renters Will Be Born
In light of this shift in renter demographics, and the move to more renters-by-choice (rather than by default), Web trends toward personalization and super-local information will beget tools to better find and choose rental homes in 2011.
Rental listings will go from a few lines of text and a couple of photos to floor-plan and map-laden experiences. Enhanced map interactions will be possible as developers use local data -- not from apartment owners, but from city governments, public transportation systems and even user-generated reviews -- to help renters find places based on their preferences of travel time to work on their preferred mode of transportation, what sort of noise level they can tolerate and the "flavor" of neighborhood they're seeking. Users will increasingly coach each other on what to expect from a particular building or landlord and what the going rents are in a given area or community, helping each other understand how to negotiate for the best rents and lease terms.
Real Estate Predictions for Renters in 2011