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New Report Shows Nearly 1/2 of Homeowners Okay with Renting Out Their Home
Nearly 50% of Homeowners Okay Renting Out Their Home
As platforms like Airbnb and Homeaway have risen to prominence over the past decade, they've created a ripple effect in the way young homeowners regard their property. In particular, many homeowners have become willing to rent out part or all of their home to generate additional income.
Survey Says: Homeowners Willing to Rent
According to a brand-new study published by Realtor.com, an increasing number of younger homeowners are open to the idea of renting out some or all of their residence as a way of generating extra cash flow and/or helping to pay down their ballooning mortgage debt.
In total, the survey suggests that 32 percent of homeowners are experimenting with a variety of approaches to earning additional income via their property. This includes renting out a spare room full-time, renting their house when they're away on vacation, and finding a roommate.
An impressive 85 percent of homeowners say they'd consider building onto their home in order to create rentable square footage. According to the survey, the top reasons for renting out part or all of their home include:
- To earn extra income to save
- To get extra spending money
- To lower the cost of monthly expenses
- To offset major home expenses (such as a mortgage)
- To cover the cost of a family vacation
In addition to renting out square footage, the survey found that some people are using creative tactics like renting out a pool (6 percent) and/or renting a garage or parking space (7 percent).
Shifting Attitudes Toward Homeownership
The fact that nearly half of homeowners are okay with renting their home indicates a much larger shift in attitudes toward home ownership. If you zoom out and look at the bigger picture, you'll see that times are changing.
Here are several big trends that millennials are leading:
- Renting over buying. In 1981, 35 percent of properties were owner-occupied. Today, that number has dropped to just 22 percent (leaving more than three-quarters of properties as rentals). These statistics show today's millennials are much more open to the idea of renting.
- Non-traditional home sales. The vast majority of homes that are sold use a real estate agent who places the property on the MLS. But this comes with a number of stressful facets (including juggling offers, negotiating a price, dealing with inspections, waiting for appraisals, etc.). As a result, many homeowners are turning to cash home buyers for a much faster and less stressful alternative. This is especially common in hot markets where homeowners want to be able to move quickly to another property.
- Smaller houses. For many decades, the square footage of homes increased year over year. This all culminated in the 1990s and early-2000s with the explosion of the "McMansion." But in the past several years, there's been a noticeable jump in the number of homes with smaller footprints. The square footage of new builds is declining and buyers are much more interested in convenience features (like smart-home technology and outdoor living).
- Return of the townhouse. As the price on single-family homes rises, we've seen an increase in the appeal of townhouses. They typically cost less, offer more conveniences, and are usually located in more favorable areas of town. These are all huge advantages for buyers who don't want the hassle and cost of maintaining a large home.
- Rise of flex spaces. Today's homeowners aren't nearly as concerned about the number of bedrooms in a home as they are interested in the potential for flex spaces. This trend is underscored by the rise in work-from-home professionals who need rooms that can double as bedroom and office. Playrooms, workout rooms, movie rooms, and hobby rooms are other potential uses for these flex spaces.
Homeownership is still desirable, but it's not nearly as sacred as previous generations have treated it. Today's young adults view housing as just part of their lifestyle.
Given that, they're more flexible when it comes to aspects of ownership that Baby Boomers regarded as critical.
Adding it All Up
Every generation has its own tastes, beliefs, and priorities. With regard to home ownership, it's clear that millennials and younger adults are more interested in independence, flexibility, and a relatively stress-free experience.
It remains to be seen what sort of impact this will have on long-term housing trends.
