Times, they are a-changing. If you’ve been paying attention to the real estate market in your neighborhood over the past few years, you’ve probably seen a trend: Overall home buying is down and renting is up. The reasons for this trend are many; some obvious, some a little less so. But they all point to the economy and its near collapse a few years ago. Don Bailey, President, Emerging Businesses at the Allstate Insurance Co., explains the upward trend in renting as a fundamental change in “The American Dream.” “In the late 1990s and early 2000s, lower unemployment rates and mortgages that required little or nothing down made buying a home an easily achievable reality. American families could have their 2.5 children, minivan and the white picket fence,” says Bailey. “With the meltdown of the housing markets in late 2007, which set off the nation’s worst economic downturn since the Great Depression, Americans’ reality changed, and so too did their definition of this fundamental precept within the American Dream. In the aftermath of the housing market crash, the state of the U.S. housing market quickly shifted, lending standards tightened and the majority of Americans were left looking to rent versus buy.”
This trend continues today, according to Bailey, as single-family home construction hit a record low in 2011 and many homeowners are still working to replenish their inventory, while at the same time, the renters market will likely increase. “Going forward, renters will increasingly be single persons, single-parent families, unmarried partners and unrelated roommates,” says Bailey. “Minorities and immigrants are also expected to account for a growing share of these newly formed households – from 2001 to 2010 they contributed more than three quarters of the 3.9 million new renter households.” In addition, Bailey points out that during the next 10 years, two simple factors will add to the renter population: increases in overall population, and increases in the elderly. Population growth alone is expected to increase the number of renter households by more than 3.6 million. As the Baby Boom generation continues to age, says Bailey, the sheer size of that group will push up the number of renters over the age of 65 by nearly 2 million, as rentership rates tend to rise among elderly households.
Bailey adds that while the growth in renting seems clear, unfortunately, a majority of renters do not protect their personal property with proper insurance coverage. “More than half of renters put themselves at risk by not protecting their home in the same capacity that car owners and homeowners do,” says Bailey. “And while three-quarters of renters have auto insurance, renters insurance is overlooked.” In closing, Bailey noted that renters insurance helps protect personal belongings in common risks such as theft, fire and smoke, and water damage — protection that can come in handy in the event of a extreme weather catastrophes. “Catastrophes don’t discriminate between owners and renters. Isn’t the new American Dream worth protecting?”