The Cost of Renting
Posted by Lee Cameron on Thursday, April 14th, 2011 at 10:06am.
These last few years, the American dream has changed. The dream of owning a home has slipped out of the reach of many people for the time being. Now, renting is becoming more and more popular. Even the government is encouraging more renters in hopes of avoiding another collapse in the housing market like we just experienced. Of course, with rentals now in high demand again, that can only mean one thing - the costs go up.
Rental vacancies have dropped sharply over the last couple years, and rates have shot up to meet the demand. It's estimated that rents across the country will increase by more than 3% over the next year. In some of the most sought-after areas, like New York, rents have shot up an average of 9% from where they were five years ago.
And along with higher rents, the increased demand means that rental communities will no longer need to offer the incentives that they used to use to pull in new residents. It will become harder and harder to find communities offering free months on sign- up.
Additionally, many landlords are now requiring a new tenant to get renter's insurance before they are allowed to rent a property or unit. Of course, this insurance is meant to protect the community in the case of any accident or injury on the property, but it is also a good investment for the renter, not only covering the cost of the tenant's valuables in the case of an accident, but also, often, their hotel stays and additional expenses. However, by requiring this insurance from all tenants, it simply guarantees more costs for the renters.
Potential renters also need to take into account the cost of storage. Many new renters are out of a home due to foreclosure or being underwater and are forced to downsize. Often, this leads to enough excess "stuff" to require a storage unit. Local storage properties have seen a huge increase in business over the last couple years, and their rates have gone up accordingly as well. For a standard 100 square-foot unit, be prepared to spend an average of $150 a month.
The truth is, even with tighter lending restrictions, there are many cases where it's still a better idea to buy than to rent. With home prices down as much as they are, sometimes the cost of owning a similarly sized home is actually less than renting, and owning carries a number of benefits that renting does not. Before you decide to rent, make sure you factor in all the costs that you will need to pay and make sure you at least take a look at the housing market. You may be surprised to find that the American dream isn't quite as far out of reach as it seems.
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