A while back I wrote about how I think renting is a superior form of ownership. As I keep reading and trying new secondary markets, from Uber to Getaround to AirBnb, I am even more convinced that owning things is ill-advised. Right now every internet user can rent cars, tools, bikes, and dozens of other products and services which used to be enjoyable only by the people who ponied up the cash to purchase them [1]. Distributed economies have changed the value of owning things, but most people are still paying too much to own too many things and it makes us unhappy - I call this over-ownership.
A classic example of over-ownership would be buying a home when early in life.
According to Bureau of Labor Statistics, 50% of people between the ages of 20 and 24 have been with their current employer for less than 2 years [2]. The only age group in which people have worked for their current employer longer than 8 years is 55+. An 18 year old person can expect to move 9.1 more times in their life. By age 45, people can expect to move another 2.7 times [4]. That's approximately 1 move every 4.2 years for people between the ages of 18 and 45.
Using the New York Time's "Is it better to rent or own?", I calculated that if you live in Raleigh (my previous city of residence), pay less than $1,000 in rent, and want to purchase a $200,000 home [5] on a favorable 2.8% mortgage and 1% property tax rate, it only makes sense to purchase if you expect to stay put for more than 6 years. If you live somewhere like San Francisco (where I currently live), and want to buy the average $1M home, and you currently pay $3,000 per month in rent, it will take 18 years before it makes sense to buy.
So most young people shouldn't buy houses, yet according to Calculated Risk and The Atlantic [6], more than 38% of people between the ages of 25 and 29 do own their houses. This says that me that a fair number of those buyers are going to lose time, money, and sleep on their housing purchases.
Now, think about all the items in your home and think about how much you use them. Think especially of expensive items; KitchenAids, belt sanders, laptops, etc. I would be willing to wager that it would be cheaper for you to rent items you use infrequently instead of owning them. I would go even one step farther: renting would not just be cheaper, it would solve a myriad of other lifestyle problems. If you had 50% fewer objects in your house, think about how much easier it would be to clean, how much less time you would have to spend maintaining possessions, and how much easier it would be to move to the next home/apartment.
There aren't currently enough online services and they are still too inconvenient for my vision of utopian rentals to be practical tomorrow, next month, or perhaps even next year [7]. But in the near future, renting will make our lives universally better by allowing us to own less stuff.
[1] Car rentals, boat rentals, parking space rentals, and especially service rentals like Taskrabbit. And these are just a few examples in each category.
[2] http://www.bls.gov/news.release/tenure.t01.htm">http://www.bls.gov/news.release/tenure.t01.htm
[3] Surprisingly, the old adage about 7 career changes in a lifetime is also bunk: Seven Careers in a Lifetime? Think Twice, Researchers Say.
[4] Calculating Migration Expectancy Using ACS Data
[5] Trulia housing demographics for Raleigh puts the median value of a house in Raleigh NC at $200,000.
[6] http://www.calculatedriskblog.com/2009/04/us-homeownership-by-age-group.html, The end of ownership: why aren't young people buying more houses?"
[7] One comment I received on the original version of this post was that in making my recommendation for renting, I forgot to include time costs. The basic argument is that there is too much friction in renting, which makes renting a $300 Kitchenaid, for instance, a bad deal. Existing services would require you to find a nearby person renting the item, perhaps drive to their home, sign a paper, drive back to your home, use the mixer, and repeat the process when returning it. But I'm not thinking about existing services. When I first wrote this post, Getaround didn't offer instant rentals, but now they do. The same is true for AirBnb and a host of other services. The instant acceptance peer to peer rental markets are already thriving, we just haven't hit saturation with all the stuff we could possibly rent.
Special thanks to my good friend Ben for checking my numbers on this post and keeping me honest.
