Why do some families rent and others buy?
The term “rental market” has been used in the United States since the late 1970s to describe a marketplace for renting apartments and condos.
Since then, however, the term has been applied to many different kinds of housing markets, from single-family homes and apartments in suburban sprawl to large-scale residential developments, and even in cities like Los Angeles, New York, and San Francisco.
The term has also been applied in the housing industry, in particular to the rental market in which people rent and own homes.
A new study by researchers at the Massachusetts Institute of Technology, however — a team that included the University of California at Berkeley’s Peter Zuckerman and the California Institute of Tech — has challenged that perception.
“We are not trying to create a housing market in a vacuum,” Zuckerman says.
Instead, the researchers used the term to describe the housing market’s dynamic interaction with other housing markets.
“There is an interaction between the rental and the market,” he says.
“What happens when you are renting versus buying?
What happens when the market goes up and you sell?
We thought that we could actually identify that dynamic interaction between those two and measure it in terms of housing prices.”
They also discovered that people’s housing prices tend to vary a great deal depending on how they rent, and in ways that are hard to measure with traditional measurements like house price or rent.
So, how do we measure the dynamics of this market?
To find out, Zuckers group of researchers collected information on about 500,000 people who rent or own apartments in cities across the United State.
In each of the cities, the group also tracked the price of those apartments, which the researchers then compared against the average rent in each of those cities.
“It’s really difficult to measure a market that doesn’t exist,” Zucks says.
Zuckermans team then looked at the data to understand what kinds of interactions people might be having when they rent.
The researchers found that the rent-market interaction is quite dynamic, and the way people rent their apartments matters a great bit.
In particular, they found that people tend to be renting a lot more when they have the opportunity to do so, while people who are renting less tend to buy more.
In some cities, for example, the rent differential between people who buy and rent is between 3 and 4 percent.
But people who own homes tend to own less and buy more, and so these dynamics matter in a significant way.
Zucks and his team then focused on two specific aspects of the market that might affect people’s purchasing decisions.
First, they looked at how many people rent, because if you think about it, people who live in apartments are not necessarily purchasing those apartments.
People typically live in them for the same reasons that they do in houses: to live.
People also generally rent apartments for different reasons, and people in apartments tend to spend a lot of money on things like groceries and clothes.
Zuckermans team then studied the relationship between the rent of a single-unit apartment and the rent a family would have paid to buy a similar apartment in the same city.
In other words, the team looked at a different kind of relationship between renting and buying that has been observed in other cities.
The study found that renters tend to rent apartments that are cheaper to rent, while they tend to purchase apartments that sell for more.
And in some cities — such as San Francisco, Los Angeles and Seattle — people buy more apartments than they rent because they are able to buy them for more money.
These patterns also matter in terms on buying.
In San Francisco and Los Angeles alone, for instance, the average family spends $1,200 per year on rent.
In these cities, where there is an abundance of affordable housing, the family might purchase an apartment that costs $400 less than it does in a city where the market is relatively cheaper.
ZUCKERMANS TEAM ON FEDERAL HOUSING PRICES: A COMPARISON of TEXAS HOUSES TO CALIFORNIA Zuckerts team found that these differences matter a great amount, because it helps explain why people rent a lot less in the Bay Area and Los Vegas and why they purchase a lot.
The results are surprising, says Zuckerg, because most people don’t understand how the rental/buy interaction affects their buying decisions.
In a recent survey of 1,000 Americans by a research group called the Center for Neighborhood Enterprise, Zuckerberg and his colleagues found that nearly half of all respondents believed that the Federal Housing Administration (FHA) would only allow low-income people to buy single-home properties.
“If you think of what the FHA is trying to do to help low- and moderate-income Americans, it’s actually the opposite of what it’s trying to help,” Zuckererman says.
The FHA regulates and provides loan guarantees for low-and moderate- income people to purchase homes.
However, the F