Happy Renters Stay On Homeownership Sidelines
STEVE INSKEEP, HOST:
OK, so Sony is losing money, the post office, losing money, and American homeownership rates have fallen to their lowest point since 1997. That's last item sounds like bad news but, well, maybe it's not. Home ownership rates have fallen despite stabilizing housing prices in many parts of the country and very low interest rates.
Couple of years ago, though, NPR profiled two Boston couples at opposite ends in life who had one thing in common: they both were renting with no regrets.
Today Curt Nickisch of our member station WBUR follows up to see if they've been tempted to buy homes given the improving market.
CURT NICKISCH, BYLINE: We last heard from Prashant Jeloka and Meenal Bagla in their creaky apartment building in Boston. Well, two years later, the married couple in their early 30s is still renting, but they're in a very different place now.
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NICKISCH: It's a brand-new high-rise apartment complex in India, in the booming New Delhi suburb of Gurgaon. Meenal is putting on a party for her brother, who just had a baby girl.
MEENAL BAGLA: Personally, yeah, I mean it's been fantastic. I'm glad that I was here for that milestone, you know. So it makes me happy that I'm close to family.
NICKISCH: Returning to India for a while has been good, professionally, too. Meenal's U.S. employer asked her to open an office in the country. Back in Boston, she and Prashant had thought about buying a place. That was when Congress was handing out thousands of dollars to people like them - a tax credit for first-time homebuyers.
BAGLA: I don't regret having not bought, at all. Because I think it gave us the flexibility at the time that we needed it.
NICKISCH: Prashant says buying would have made picking up and moving harder to do. Doesn't matter that it was India, could've been Indianapolis. Either way, they would have had to sell or else rent out their house.
PRASHANT JELOKA: And if it was expensive enough, we might have chosen not to do it, which I would have regretted more than anything else.
NICKISCH: Now, they're moving back to the U.S., looking for jobs in Boston, New York, and San Francisco. And this time, they might buy a place. But they haven't changed their philosophy about renting versus buying. Prashant says what's different is that they're planning to put down roots for at least 10 to 15 years.
JELOKA: Renting gives us some benefits which we've enjoyed so far. Buying gives us some financial benefits, only if we do it long term. And now that we are thinking long term, we might be open to doing it. The fundamental thinking hasn't changed at all, I don't think.
NICKISCH: What has changed is that more people are thinking like them.
JOE GYOURKO: At the end of each class at the end of the term, I ask my MBA students, how many of them are going to buy a home? And there has been a really sharp drop.
NICKISCH: Joe Gyourko teaches real estate at The Wharton School. He says five years ago more than half the class - roughly 25 people - would raise their hands. At the end of this semester, only two students did.
GYOURKO: So young people, I've often wondered why they own is such high propensities, because they should be more mobile and be able to move to opportunities, because their careers aren't set. So I think this is actually not a bad thing.
NICKISCH: The older couple we profiled two years ago is still renting, too. When we last spoke to John and Barbara Horan, they'd been living in the same triple-decker apartment in Boston for 40 years. Now, two years later, it's been 42 years renting the same apartment.
BARBARA HORAN: John did the kitchen - painted the kitchen and the ceiling, that's done. Got me a granite sink. Last couple of weeks we tackled doing all of the floors ourselves.
NICKISCH: Barbara and John just bought new furniture, too. They raised their kids here. They have a great relationship with the landlord. Barbara doesn't ever want to move.
HORAN: Next place I go is to the funeral parlor.
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HORAN: I have all this stuff. I mean I'm settled.
NICKISCH: But there's a tradeoff. On the one hand, they haven't tied up their money in a house - they've been investing it. But they don't own. And so, any day, John says, the landlord could kick them out. Maybe he passes away and the kids sell the building.
JOHN HORAN: At some point in time, it's going to happen. You know, they're going to decide to, whatever, I don't know what.
HORAN: They're here.
HORAN: That's all right; it's a matter of time, Barb. It might be tomorrow or it might be 10 years from now, who knows.
NICKISCH: But that uncertainty doesn't bother them that much. John says there's always someplace else they could rent. Two couples, two years on, still renting with no regrets.
For NPR News, I'm Curt Nickisch, in Boston. Transcript provided by NPR, Copyright NPR.