As more people are unable, or unwilling, to buy a home, many major destinations in the Bay Area and beyond are turning into cities of renters.
A quarter of the 100 largest U.S. cities saw renting — not owning a home — become the new norm over the past 10 years, according to a recent analysis of U.S. Census data by apartment search website RentCafe. It’s a stark change particularly evident in the Bay Area, where sky-high home prices make renting the only option for many. But experts say the shift also is driven by cultural changes that have made renting attractive to some millennials, who are rejecting being tied down to a mortgage, at least for now.
“There’s no nice way to put this. The idea of owning a home lost much of the charm that once made it a structural element of the American Dream,” RentCafe writer Balazs Szekely wrote in a blog post publishing the data.
As of 2016, Oakland ranked among the top 10 cities with the highest share of renters — 59 percent. San Francisco is another renter-majority city, with 56 percent of residents paying a landlord for housing.
Fremont saw a 31 percent increase in its share of renters between 2006 and 2016 — the sixth largest jump among cities studied. Less than a third of Fremont’s residents rented in 2006. By 2016, that jumped to 42 percent.
In San Jose, on the other hand, 58 percent of residents lived in a home they own.
The surge in renting is something Sydney Bennet, senior research associate at Apartment List, has noticed as well. It started after the housing bubble burst in 2008, and many people who had their homes foreclosed didn’t immediately go out and buy again, she said. Then a new generation graduated college in the recession without the savings to buy a house.
“And the shortage of affordable homes makes it so even once they do have some savings, it makes it hard to find a home, especially in the Bay Area,” Bennet added.
In San Jose, for example, it would take a single home buyer nearly 31 years to save for a down payment on a home, according to a new Zillow study that analyzed housing prices and Census income data. In San Francisco, it would take almost 28 years.
At the same time, cultural norms have shifted, making renting a more attractive option to millennials. There’s no longer a stigma around long-term renting, and renting gives residents flexibility that home ownership doesn’t, Bennet said. That’s not to say young people don’t ever want to buy a home.
“We’re finding that 80 percent of millennials do still want that,” Bennet said, “but I think there’s less pressure to do it quickly. I think you see more people still renting when they have kids, which may have been less common 10 or 15 years ago.”
But in the past year, home ownership appears to be on the rise again. The rate of U.S. residents who live in homes they own ticked up from 62.9 percent in the second quarter of 2016, to 63.9 percent in the third quarter of 2017 — the highest rate since 2014, according to Apartment List.
“Undoubtedly, the recession had a great impact on homeownership, and it’s hard not to agree if you look at the data from the last decade or so,” Szekely wrote. “However, it looks like it takes more to discourage Americans from buying a house than that.”
Cities of renters
More people are renting homes instead of buying in cities across the Bay Area.
Oakland — 59 percent of residents rented in 2016, up 12 percent from 10 years ago.
San Jose — 42 percent of residents rented, up 16 percent
Fremont — 42 percent of residents rented, up 31 percent.
Fresno — 52 percent of residents rented, up 8 percent
San Francisco — 56 percent of residents rented, up 4 percent.
Sacramento — 50 percent of residents rented, up 11 percent.
Source: RentCafe
Article source: https://www.mercurynews.com/2018/02/09/is-home-ownership-losing-its-luster-in-these-bay-area-cities/
