"More affluent Americans are opting to rent as oppose to buy,” says Jack McCabe, an independent real estate analyst and CEO of McCabe Research and Consulting in Deerfield Beach, Fla.
In a twist on the American dream, the rich now are renters.
From an article at CNBC:
Patrick Lee went from homeowner to home renter this year.
It may sound like a downgrade, but the New Yorker didn't make the switch because he couldn't keep up with payments or because he lost his job. Instead, Lee was nervous about the state of the housing market.
So in March he sold the Manhattan apartment he bought in 2008 for about the same price he paid and moved — along with his wife and child — a few steps away into a luxury, two-bedroom rental unit in a brand new building.
Lee wouldn't disclose what he's paying, but similar two-bedroom apartments in the building usually rent for $11,000 a month.
“I wanted to protect ourselves from prices going down,” says Lee, who is a managing director at a major bank. “I didn’t want to be an owner anymore.”
So is it smart not to own? Isn't this a "buyer's market?"
In Manhattan the demand for high-end rentals has never been hotter. In the third quarter of 2010 there were 200 new leases signed for rentals charging $10,000 a month and up, more than double the 89 leases signed the year before, according to Jonathan Miller, CEO and president of New York City-based real estate appraisal and consulting firm Miller Samuel.
Last year, the phones at Foundation Rentals & Relocation office were ringing constantly with high-end homeowners wanting to rent property that they couldn’t sell, but no one was interested in renting them.
Now the firm is getting calls from executives, especially in the technology sector, looking to move into a rental.
“They’re entrepreneurs. They would rather put their cash in their business,” says Darcy Barrow, who founded the firm with her husband Christopher Barrow.
“And get a greater return,” adds Christopher.
Chris Wells, a broker working in the Palm Beach-Boca Raton-Coconut Cove area, says he has seen “skepticism” from would-be buyers, who ultimately decide to rent a home before making a purchase, easily spending about $8,000 to $15,000 a month, because they are waiting to see if home prices continue to fall.
“In Florida, we’re really not out of the recession yet,” says McCabe, the analyst. “There is no urgency to buy.”