Is renting becoming the new American Dream?

Last month, CNNMoney.com reported that home ownership for Americans under the age of 35 reached a new 16-year low. David Harris, a real estate investment trust analyst with Gleacher & Co. in New York, said, “Some people refer to it as a propensity to rent but in reality, it’s an aversion

to buy,” explaining this trend in the simplest of terms.

At the same time, the U.S. Census Bureau reported that rental vacancies fell to 9.7 percent in the first quarter of this year from 10.6 percent a year ago, making it clear that as homeownership drops it is apartments and rental properties that are benefitting. While the economy chugs along slowly and without definition, apartment rentals are suddenly a pretty flower in an otherwise still relatively dull real estate landscape.

The rental market is not all roses, though. A 9.7 percent vacancy rate for apartment product is still high by normal standards. But it’s a trend in the right direction for investors and owners of rental properties linked to a broader conversation about the psyche of Americans during the housing crisis.

So many younger Americans were beat up by their experience with homeownership or watching what happened to their parents during the housing crisis that their view of the virtues of homeownership has been redefined for a long time. This new group of renters isn’t looking just exclusively at apartments and duplexes, though. Some still need a single-family home in a single-family neighborhood.

Called by industry insiders the “shadow market,” investors are gobbling up foreclosed-upon houses or unsold homes and renting them out in neighborhoods where historically almost all of the homes were owner-occupied.

As more and more homes are thrown into this new rental pool, the flavor of our neighborhoods could be affected as well. Renters may see their home very differently than homeowners. For them, a home will be a place to live only. Their nest egg and American dream will be grown somewhere else. They will be more mobile — because they can act on a desire to move without having to put their home up for sale and buy another. They’ll look for more technology and efficiency in the homes they rent because competition for their rent checks will drive landlords to compete for their attention with things that matter more to this under-35 set.

The impact will be subtle and odd in some ways, too. There will be little warning that your neighbor might be moving. No for sale sign on a neighbor’s home as you are out taking an evening walk. One month, the people living in that house are gone and another family slides into their place.

In your casual neighbor-to-neighbor conversation, these renters will feel like they, not you, have the housing market figured out. They’ll view themselves as the wiser ones in the neighborhood because they chose to rent while you are burdened with ownership. To them, the American Dream is flip-flopped, changing the old tag line to a new one: “Why buy when you can rent?”

Tom Hoban is co-owner of Everett-based Coast group of commercial real estate companies. Contact him at tomhoban@coastmgt.com or 425-339-3638.