Over the last decade we have added 7 million renting households. Is this because of population growth? No. This trend was driven because of the boom and bust in the housing market. Investors crowded out regular home buyers in buying single family homes and now, we have millions of new renters out in the market. Many of these people are folks who lost their homes via foreclosure.
For better or worse, homeownership is a path to building equity. It is a forced saving account for many. Most Americans don’t even benefit from the stock market peaking because nearly half of the country doesn’t even own stocks. And many own only a small amount. Most Americans derive their net worth from their primary residence. With fewer buying and more renting, I doubt that on a full scale people are suddenly buying stocks for the long-term. But it is also the case that many are simply renting because that is all they can afford. Many young Americans have so much debt that this is all they can pay. Think of places like San Francisco where jobs pay well but rents are simply out of this world and home prices are nutty.
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