Renting an Apartment Is Better Than Buying a Home, Essay Example

Abstract

The advantages to renting an apartment rather than investing in the purchase of a home have always been such to make apartment life an enormous element of residential living. Apartment life has always provided a degree of freedom in relocating the homeowner does not enjoy, and it also traditionally gives the renter far less in the way of responsibilities and financial obligations. In today’s world, however, the advantages multiply. In an uncertain economy, and one still recovering from a real estate crises which drastically changed the face of the housing resale markets, apartment living is more desirable than ever for many Americans. Moreover, it remains an excellent lifestyle choice for recent college graduates, retired persons, and those with either credit issues or low incomes.

Renting for New Graduates

Today’s real estate issues aside, renting an apartment is the most sensible choice a recent college graduate can make when it comes to setting up a residence. It could be argued that it is not only far more advisable, but that the option of buying home should be actually discouraged at this stage in the person’s life, even if they have the means to do so.

Two defining aspects of the college graduate are the beginning of a career and the commencing of a new life more often than not burdened by debt. Much of this debt is usually education-related, but not all of it: “Young adults between the ages of eighteen and twenty-four have 22 percent higher credit card debt than those who were that age in 1989” (Brandon, 2010, p.150). As for the career, it is typically a matter of learning in the process and the average graduate cannot know in these early stages just where they will be best located to advance. A residential commitment beyond a one-year lease for someone unsure of where their career will take them is unwise, and particularly so in a market wherein a purchased home may well decrease in market value.

Renting also provides the graduate with a benefit often not taken into account: credit history. Most people are unaware of the fact that monthly bills, such as electricity and rent payments, are in fact forms of credit which impact strongly on the individual’s financial history. By establishing early a timely schedule of rent payments, the college graduate is already bolstering their credit report for when major purchases, such as homes and cars, will be more advisable.

Lastly, renting an apartment gives the graduate an over-all flexibility in living both desirable to young people and suited to the life changes young people undergo. Moving to a larger apartment to accommodate a roommate situation is relatively easy; rents are typically not as high as mortgage payments; and the burdens of repair and maintenance are almost always shouldered by the apartment ownership. All these factors combine to make apartment rental the smartest choice for the college graduate.

Retirees

Ironically, what renders apartment living preferable for young people also makes it an excellent option for retired persons. For different reasons, dealing with the costs and burdens of maintenance is difficult and ultimately unnecessary, for often the retiree is paying to maintain a property far too large for their current needs. This is particularly true of the many older couples who have seen their children start their own lives and are left with an expensive and impractical residence. “Many seniors have their major financial assets tied up in the value of their residence. When this declines sharply, as it has…senior plans to….maintain a desired standard of living are given a severe jolt” (Kresl, Letri, 2010, p.8).

Retirees are largely identified as living on fixed incomes, which are not intrinsically enabled to accommodate the unexpected and often excessive costs home ownership entails. Like the college graduate, the average retiree benefits from a simplification of residential factors, and this translates both to the cost and actual labor, when it comes to daily maintenance of a residence. It is, quite simply, more difficult for elderly people to care for a property, and the built-in tending to it most apartments offer is highly desirable for them.

Also, the retiree individual or couple is often left in isolation in the large home in the neighborhood increasingly emptied out from similar family changes. Apartment life, either independent or in assisted living, provides a necessary degree of community.

Credit History Problems

The very recent and drastic shifts in U.S. Economics, to most beginning with the housing crisis of 2006,  have left many people with poor credit histories, quite a few of whom enjoyed excellent reports only a few years earlier: “The speculative bubble in housing led to the recent credit expansion. Increasing housing pricing encouraged people to borrow a lot…The burst of the housing industry bubble meant that many people could not repay their debts” (Hollander, 2010, p.61). It was, and still remains, a devastating blow to many millions of Americans, and one with great impact on how and where they live.

The fact remains, however, that it is almost always easier to secure an apartment lease than purchase a home, no matter what the credit history of the individual. Personal discharges, or bankruptcies, are running at all-time highs, yet this in itself does not necessarily work against the person who has both declared bankruptcy and has a poor credit history, because the entire playing field has so expanded. Rental agents and apartment managers no longer view the bankrupt applicant as an automatic bad risk because, frankly, to do so would be to eliminate too large a segment of their client base. The financial stigma of bankruptcy is vastly lessened, and is in fact viewed by many apartment brokers as precisely what it is meant to imply: a person who had issues but is now making a fresh start.

As with the college graduate, renting an apartment allows the renter with poor credit the opportunity to build a good credit history again, especially as many apartments are operated through corporations. Regularly-made payments of rent translate to credit debt met. Add to this the advantages in living that so many apartments provide, such as free gyms and swimming pools, and the benefits to apartment rental become even more favorable.

Low-Income Households

It is unnecessary to state the obvious, in that those earning less should seek the least expensive mode of living. Yet there are other reasons why renting an apartment is the far better choice for such people. This relates, as does so much else, to the recent upheavals in the housing market itself.

Common wisdom once dictated, and not long ago, that even a small salary was better spent in the investment of a home, rather than in “throwing it away” on monthly rent which buys nothing but that period of rented time. We have seen, however, that not only may the real estate market vary widely, it may never again be depended upon to ensure a higher yield after a given period of time. The notion of a home’s only increasing in value has been rendered a moot point, at best. Thus money – and typically in larger amounts than would go for rent – is and has been invested in properties which may very well reduce in value over time. In this scenario, the home buyer is actually “throwing away” more money than the renter.

In the past year, reversals in the downward spirals in the housing industries have been both documented and predicted to gain in substance. The lesson which must be learned, however, is that it can happen again, and the day of the purchased home as unassailable and valuable investment is long-gone. This knowledge in place, the low-income individual is in a sense in exactly the same place as his more prosperous friends: neither can afford to invest money in a potentially losing proposition, and for both apartment rental is a viable and highly attractive option.

Conclusion

As retirees, college graduates, and those with poor credit and/or low incomes are better off by far in renting an apartment than in seeking to buy a home, so too should the rest of the population seriously consider its course in this regard. A shifting and unstable economy, job markets that have recently reached unprecedented lows, and even merely the expense and work required to maintain a property all point to our modern era as one in which apartment living, be it in the suburbs or the city, is more desirable than ever before.

References

Brandon, C. (2010.) The Five-Year Party: How Colleges Have Given Up on Educating Your Child and What You Can Do About It. Dallas, TX: BenBella Books, Inc.

Hollander, B. G. (2011.)  How Credit Crises Happen. New York, NY: The Rosen Publishing Group, Inc.

Kresl, P., and Letri, D. (2010.)  The Aging Population and the Competitiveness of Cities: Benefits to the Urban Economy. Northampton, MA: Edward Elgar Publishing, Inc.