NEW YORK — Almost two in three American renters (63%) have thought about moving to a cheaper place due to the current cost of living. In fact, a similar percentage of people believe they’ll never become homeowners because of that reason (67%).
Out of 2,000 renters polled, 74 percent say they’re worried about the current state of the economy, and seven in 10 reported that their income is not enough to make ends meet with rent, bills, and home essentials. That reason could explain why half of respondents are in debt with their landlords (51%), and it doesn’t help that 61 percent saw their rents go up in the last year.
With these financial difficulties in mind, respondents suggest that, on average, 31 percent of one’s income should go toward monthly rent payments, and 35 percent should go toward other monthly expenses and necessities.
Despite this bleak forecast, 69 percent are optimistic that their economic situation will improve in 2023.
Are there any benefits of renting?
According to the survey conducted by Lemonade and OnePoll, 57 percent of Americans say inflation has affected their rental decisions. Of those renters in that category, 65 percent have had to look for homes with the cheapest rent, 60 percent downgraded their apartment or house size, and 57 percent have tried to negotiate a reasonable price or annual increase with their landlord.
Regardless, a majority think the rental market will continue to rise post-COVID (65%).
When asked what they thought were the advantages of renting, most tenants cited reasons such as not worrying about property taxes (69%), having the flexibility to live anywhere (66%), and not worrying about repair bills (59%).
In contrast, respondents listed several disadvantages of renting, including dealing with a bad landlord (62%), being subjected to rent hikes (61%), and being unable to make changes to their rental property (60%).
“Between the cost of rent, a lack of inventory, and the mass migration we saw throughout the pandemic, the rental market has fluctuated tremendously across the country over the past few years,” says Sean Burgess, chief claims officer at Lemonade, in a statement. “And while we’re starting to see prices regulate throughout the market and a return to more traditional moving trends, rising inflation and general fear of recession will continue this turbulence for a little while longer.”
Beware of the ‘sweetheart deal’
The survey also asked respondents to describe their rental status, with more than half saying they signed a new lease agreement during the pandemic (53%). Of those who signed a new lease during that period, 73 percent call it a “sweetheart deal” – or an unofficial agreement between them and their landlords.
It’s no surprise that the majority now regret signing those sweetheart deals in the first place (84%). Many respondents now realize that those unofficial deals don’t offer them protection as renters (39%), it’s only temporary (32%), and that it doesn’t offer them any stability (19%).
Still, 64 percent think the current home they’re renting is worth the money they’re paying.
“Now more than ever, a lot of renters are paying more on their monthly rent than they originally expected, so what better time than now to protect yourself from other financial burdens,” Burgess adds. “This is where renters insurance can play a big part, protecting not only the things in their home but also themselves. For instance, if someone’s apartment becomes unlivable due to a fire or they’re liable if someone is hurt in their home, they’re potentially covered through their insurance policy. At the end of the day, this could save hundreds or even thousands of dollars in unexpected expenses.”
Survey methodology:
This random double-opt-in survey of 2,000 American renters was commissioned by Lemonade between November 9 and November 14, 2022. It was conducted by market research company OnePoll, whose team members are members of the Market Research Society and have corporate membership to the American Association for Public Opinion Research (AAPOR) and the European Society for Opinion and Marketing Research (ESOMAR).