Safety in Renting

A recent decline in the home ownership rate raises the possibility that people now realize that home owning is too risky for some. However, we should not forget that renting also is risky for others. This article outlines two sources of risk that owning avoids and renting does not – by owning, low-mobility households can lock in their housing costs and all households can hedge themselves against changes in the cost of housing from moving – and a source of risk that renting avoids: Uncertainty over the sale price of a house. The article shows which kinds of households would best avoid risk by choosing renting, or owning. The recent decline in the home ownership rate does not appear to be driven solely by natural renters returning to renting, and the article issues a challenge to landlords to find ways to make renting less risky for natural owners.

Safety in Renting , Wharton Real Estate Review(2012) (PDF)

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