NEW YORK (MainStreet) — The Great Recession came and went, and so did the Great American Real Estate Crash. Homes were lost, and so was people's confidence in homeownership. We were amazed by the heated debate spawned by an article we wrote about Millennials who aren't interested in homeownership.
To continue our exploration of the changing face of the American Dream, we explored another recent trend — homeowners who sell their abodes and choose to rent. Some ex-homeowners were happy to make the switch, while others did so under duress. No one person's story was exactly alike.
Here are the real reasons everyday Americans consider selling their homes and becoming renters by choice:
Cutting Your Losses
Britt Reints was preparing to travel for about a year, so she spoke to real estate agents about selling her home or renting it while she was away.
"Once we found out it would take about ten years for us to even get back to even, we decided to cut our losses and short-sell the house," she says. "That obviously ruined our credit, but it also made us leery of purchasing again until we're certain we want to live in one place for at least 15 years. The idea that paying a mortgage is just like paying rent—but better—is no longer something we can just assume."
Change in Living Situation
One major reason to change up your housing situation is that your living situation is changing, too. Norm Bour made the decision to sell his home after his wife and he divorced. His house was marginally upside-down, but he worked on a loan modification for many, many months, so the divorce made the exit a practical solution, he says.
"It was just my wife and I, and cats, and lots of 'stuff,'" he says. After transitioning to renting, he shed all the excess and streamlined his possessions.
Similarly, Gayle Carson decided to sell her home after her husband passed away five years ago.
"I thought I would stay, but a home of 6,000 square feet for one person is a little costly and too big," she says. She moved closer to her son and hasn't regretted the decision.
"I am now renting an apartment and loving it," she said. "No responsibility and a lot of security and amenities."
Can't Sell Because of the Market
Tony Macrito, a 30-year-old PR manager in the suburbs of Chicago, bought a townhouse in 2006 with the intention of living in it for no more than a couple years and using any equity to buy a single-family home. But like so many other Americans, the property values in his area dropped to about half what he initially paid. He later changed jobs to a new location with a longer commute, so he moved out and rented a different place—without selling his townhouse.
"Needless to say, there was no point in selling [because property values were so low]," he says. "I rented out my place at a break-even point to cover my mortgage and association fees and get an apartment closer to my job. And I can tell you how I honestly felt about renting ... hated it. You're paying money to someone else to live in their space. It's just not your home."
He also had to downgrade conveniences (no central air, no washer/dryer, no dishwasher, one less bedroom) in order to stay under the price point of his mortgage (he was also saving money for an engagement ring) since rents increased substantially.
All's well that ends well, however: Macrito found a renter who paid on time and covered his mortgage. Finally, he landed a new job closer to his home and moved back in to the townhouse.
"Eventually, I'd love to buy a single family home to give us room for growth, but the jury is still out if I could get a second mortgage on top of the one I already have," he says.
Location, Location, Location
Christine Tse, a 38-year-old interior designer in New York City, bought a two-family house with her husband in Brooklyn. Within a year, the two of them decided to sell and move back to Manhattan.
"We thought we would like living in Brooklyn, but then my husband never warmed up to it," she said. "He is a city person at heart, and he didn't like that the neighborhood was so quiet...It's only my husband and I living in a one-bedroom apartment. It's smaller than the house but very comfortable."
Foreclosure Can Lead to a Revelation
Terry, a single 52-year-old woman living in Virginia (who withheld her last name), faced a financial crisis when she was confronted with huge medical costs.
"Due to extreme medical bills, which I eventually paid entirely, I flipped houses to take the debt down," she said. "Then I moved out of homeownership when mortgage plus taxes plus condo and maintenance were just too much to afford." She repaid $400,000 in medical debt and had a near-perfect credit score when she needed another medical procedure. That caused her to miss a mortgage payment and a payment on a credit card.
"The bank foreclosed in an era before the banking crisis and housing crisis had proven to banks that working out payment schedules saved a lot of people a lot of houses," she says. "Oddly, only that mortgage and credit card attached to it were left unpaid. I had already paid all $400,000 of my prior debt. It did open my eyes, however. Now I rent at a much lower rate and am saving money in the bank."
Crazy Maintenance Charges
Dan Nainan, a comedian in New York City, recently sold his Manhattan apartment for $550,000, making him a rare success story in the current real estate market, since he bought it for $171,000.
"Part of the reason I wanted to sell it is that the maintenance charges got too high," he says. "$1,800 a month! That's almost the cost of renting a one-bedroom in Manhattan. So I sold the apartment and got a nice chunk of change, and get this—I rented an apartment in the same building, which is exactly the same layout and size!"
Freedom to Travel Joe (who withheld her last name) is a divorced 59-year-old woman who owns her own condo in Salt Lake City. She plans to sell within the next five or six years to free herself up for traveling.
"I'm going to rent a small apartment here and possibly another in Southern Arizona," she says. "Even though my condo costs less to live in than renting, I want the freedom to travel at will and not be concerned with maintenance issues, taxes, insurance, condo fees, etc."
--Written by Allison Kade for MainStreet