VOL. 128 | NO. 85 | Wednesday, May 1, 2013
Priced to Rent
By Michael Waddell
Local property management companies like Lubin Property Management LLC and Renshaw Property Management are capitalizing on the trend for young potential homebuyers choosing to rent instead of buy.
Graham Murray and Brittany Gelineau recently rented a home in High Point Terrace. The couple is part of a growing trend amongst young professionals to rent longer before buying a home.
(Photos: Lance Murphey)
“Young home renters have been our biggest area of growth,” said Ryan Lubin of Lubin Property Management LLC, which manages properties for more than 250 individual and corporate owners and a total of more than 800 homes. “Even with mortgage rates low, we are seeing more demand for rentals from the 23 to 35 age group than any other group.”
Reasons for the decision to rent instead of buy can be traced to increasing amounts of student loan debt and the fact that home ownership is simply less alluring to some than in decades past.
Lubin thinks the trend for renting instead of buying homes also could be attributed to tighter credit conditions or a desire to not be tied down to long-term mortgage commitments.
“Home ownership might not be as attractive of an option for the younger generation in their 20s, and many have more school loans/debt than ever before, making it more difficult to be approved for loans in the current lending environment,” Lubin said.
Memphis now ranks second in the country for highest average student loan balance at $19,957, just behind Las Vegas at $20,541, according to manilla.com.
Locals Brittany Gelineau, 22, and Graham Murray, 23, both accountants with Watkins Uiberall PLLC as well as grad students at the University of Memphis, recently made the decision to rent a home in the High Point Terrace area near the Shelby Farms Greenline.
“We are just starting out and trying to get our master’s degrees,” Murray said. “We felt that renting would be easier at this time because of college loans and just trying to get established in an area before we make a permanent decision to buy or not.”
Nationally the number of 25-year-olds with student debt has increased from 25 percent in 2003 to 43 percent in 2012, and the average student loan balance of that group grew from $10,649 in 2003 to $20,326 in 2012 for an increase of 91 percent.
Graham Murray and Brittany Gelineau recently rented a home in High Point Terrace. They are among a growing trend that sees young professionals renting instead of buying, in part because of a growing average student loan balance.
“The student loan debt is at a crisis in the country. It’s created a whole generation of young people who cannot afford to buy a house because of that,” said Bob Renshaw of Renshaw Property Management (RPM), which manages more than 900 homes in Shelby County and Northern Mississippi.
Student debt reached $966 billion nationally by the end of 2012, making it the second largest debt of U.S. households, following mortgages.
“I really think also that the attitude towards home ownership has changed over the past couple of years,” said Renshaw, who owns RPM along with his wife, Georgette. “I think the social stigma of not owning a property seen in previous generations has gone out the window.”
The number of people under age 40 who own homes fell by 4.6 percent in the fourth quarter of 2012, the biggest drop in records dating to 1982, according to the Federal Reserve Bank of New York. Two-thirds of all student loans are held by people younger than 40.
Searching for innovative ways to target younger renters, Renshaw listened to his younger staff members’ suggestions and RPM became one of the first property management companies in the country to develop its own app for mobile devices.
“The app became available in late 2011, and it’s been a great help for us,” Renshaw said. “It’s certainly paid for itself several times over since we began using it.”
RPM has experienced explosive growth over the past six years.
“We were in the right place at the right time when the housing bubble burst in 2007 and people turned to renting,” Renshaw said.
After the housing bust many local homeowners were left with negative equity, owing more than the house was actually worth.
“Many of our clients are not landlords by choice,” Renshaw said. “They’ve had to move out of town, and they were forced to rent out their homes because they did not sell and they were upside down.”