A new book argues that renting has replaced owning for many people and that this is not a bad thing. N.C. State University economist Mike Walden explains the author’s reasoning.
“Well what the author is saying is if you look at how people spend their money and particularly how they use certain durable goods, there has been a shift over the last few years from, for example, in terms of shelter, moving away from owning a home to renting a home, in terms of vehicles moving away from buying vehicles to leasing vehicles.
“Maybe in your lawn service, you don’t buy a lawn mower, you hire a lawn service company. And even, and this surprised me when I read it, people with young children can rent baby strollers so they don’t have to buy that baby stroller and then worry about selling it when the child grows up.
“So, the author argues there has been a shift in how people particularly have used durable goods. The author also argues that this is giving households more flexibility, particularly in terms of moving. And here he focuses on their renting versus owning: If a household is renting a home and they need to move in order to go to a better job market, they don’t have to worry about selling the house, et cetera.
“Now I think that my analysis here is that some of this is temporary, and I think that a large part of it is being driven by the home market. Clearly we’ve had a reduction in the benefits of owning a home, with the so-called crash in the real-estate market.
“I do think though … when the real-estate market comes back — when we start to see homes appreciate in value again — we’ll have a rebound back to owning, particularly in real-estate.”