Economists across the nation have been toying with the thought of a 2020 recession. A survey that polled over 2,800 Americans in May of 2019 shows one-third of people have cut their spending in the last year due to varying reasons. Of those surveyed, 5% said they lost a job, 23% say they lost an alternate source of income, 17% took on new debt, and 16% feared a recession.
People cutting spending means less focus on investing in things like stocks and property. So what does this mean for housing? Younger folks, who don’t own a house, may consider renting their best option during a possible recession for several reasons.
Coming up with a substantial down payment for a home can be incredibly costly, and take a lot of time and resources to get there. When a potential recession is on the horizon, saving for a house may sound less appealing, than setting that money aside for an emergency fund in case of emergencies, layoffs, or expectant increase in costs of goods.
Renting an apartment requires a one-time application fee, and a down payment or security deposit that is refundable upon lease-end if you move out of the unit. These fees and costs are hardly close to the down payment of a house, and in the interim can still get you a place that feels like home, while you keep preparing for your future.
In a time where younger generations have obtained crippling debt from student loans taking on more debt is not likely an opportunity they want to jump on. With costs of goods soaring, without a massive increase in post-college salaries, they likely rack up credit card debt as well, so a home loan is a massive undertaking debt-wise and is not a top priority for many.
Renting an apartment may require a background check, occasionally a credit check, but will never require owing money or taking out a loan for any part of the rental agreement. As long as you make 2-3 times the amount of rent, you are in good shape!
When you own a home, you craft your amenities. Maybe if you’re lucky, you get a house with a pool, but guess who has to do that maintenance? You do. What if your furnace breaks, your air conditioner, a window or door – you fix it, all of it.
With an apartment rental, you get amenities such as in-house movie theater, tanning beds, fitness centers, game rooms, party rooms, music space, and doggy day-spa! When you rent, you don’t need to tend to any issues or breakdowns of appliances. Renting takes all the pain, strain, and MONEY it takes to fix things around the house. Consider that all included in your monthly rent.
Some people buy a house in a condition where they already know they are going to do renovations. You purchased a home, and of course, you want to make it exactly how you want it! This chance to renovate is not available when you rent an apartment. That doesn’t mean it’s a bad thing, though! Apartments allow you not to have to stay there forever. You could move to a new apartment, or a new unit every year if you wanted to! You can be ever-changing, and keep things exciting and new whenever you like, without having to take out a small loan to re-organize your kitchen.
No surprises! Renting an apartment can come with its fair share of surprises, but not like owning a home. It’s likely when there is an electrical issue, or flooding, or anything requiring maintenance; you will be notified and given the all-clear.
There are no late-night trips to Home Depot or Googling how to fix your plumbing or unexpected repair costs. It’s taken care of! You can rest assured there will be no surprises that you have to cover on your own.
With high demand and low vacancy rates, renting in the Twin Cities remains very strong. Minneapolis added a whopping 5,000 new apartments last year, keeping up with rental demand in the Twin Cities. Part of the reason relates to a deficient housing market, with less attractive homes in areas people want to live, mainly “aging” millennials in their 30’s. A strong local economy in the Twin Cities is also a reason many young workers flock to the area and choose the flexibility of renting an apartment. With thousands of apartments across the Twin Cities, the options are plentiful and continue to thrive in this market.