The Updated American Dream: Renting

Two kids, a dog and a white picket fence: It was part of the wholesome American Dream of the past, which included a family, a steady job and a home. 

Fast-forward to 2024 and the outlook has largely shifted. One of the primary traditional components of the American Dream -- a home -- no longer is as much of a priority. That’s according to Entrata’s recently released The New American Dream Report, which indicates the desire for homeownership is tapering in the modern U.S. 

The report, based on a January survey of 2,000 renters, indicates that flexibility and life experiences have become greater priorities, often superseding the desire to own a home. Among the report’s most telling data points:  

• 41% of renters claim that their American Dream has nothing to do with homeownership 

• 20% anticipate being lifelong renters (an uptick from the 15% who indicated the same in 2021) 

• 23% enjoy the location flexibility provided by renting 

While exorbitant home prices certainly have contributed to the trend, even many who can afford homes aren’t necessarily prioritizing buying one. The report showed that 17% of respondents enjoy the flexibility of not being tied to a mortgage. As such, the term “renter by choice” is becoming more prominent, with many modern Americans OK with exchanging the white picket fence for a community courtyard with multiple gathering spaces.

Vanishing Stigma 

In the past, renters were largely regarded as those who couldn’t afford a single-family home. It was a necessary alternative as one worked their financial profile to the point that they could afford their own house. 

While that undoubtedly remains the case for some, many renters are content with the various rental options available, many of which include attractive amenities, common areas and do not require the upkeep, insurance and long-term commitment of homeownership. A robust 66% of respondents indicated that renting fits their current lifestyle more than homeownership. 

That sentiment rings true even for many who are financially secure, as 33% of renters say they could afford a home that meets their needs -- but ownership doesn’t necessarily fit into their current lifestyle. 

Reimagined Prioritization of Finances 

In a conventional way of thinking, many college graduates planned to immediately start saving for a house. That is no longer as commonplace, as many younger Americans are allocating their earnings toward more pressing financial matters. 

• 56% say they’re currently prioritizing paying off debts rather than saving 

• 43% prefer to have their savings in investments and retirement strategies rather than real estate, in part because they are easier to liquidate 

• 36% of renters prefer to invest in retirement as opposed to saving for a home 

Discretionary income is also regularly dedicated toward experiential aspects of life rather than a home, according to the report. Nearly three-quarters of respondents (74%) say they delegate any discretionary funds toward activities such as dining, travel and entertainment, while 46% indicate they have the financial means to pursue their hobbies. 

Social and Career Aspects 

In addition to avoiding what is often a 30-year financial commitment, Americans also enjoy the connectivity components of living at an apartment community. While the common-area space isn’t necessarily solely theirs, it often has more options than that of a single-family home. The study shows that: 

• 51% of respondents say they enjoy the community aspect of renting 

• 40% have utilized a property’s communal spaces for social gatherings 

• 34% say their friends or family visit at least once per month 

Additionally, many respondents believe renting better aligns with their career pursuits, as 65% of renters indicate they are happy with the direction of their career and 35% say being a renter gives them more career opportunities than being a homeowner. 

Big Picture Perspective 

A certain percentage of the population will always remain renters by default because of their personal financial situation, but an increasing number of Americans are choosing to rent regardless of economic factors. The desire for location flexibility, lifestyle experiences and a concentration on other financial priorities are among the factors making renting more attractive. That holds true not only for fresh college graduates yet to build a strong financial profile, but also for many who can afford homeownership and those with hefty credit scores. The report shows that 25% of renters with credit scores 750 and above never want to stop renting. 

Without having to worry about saving for a home, renters are able to contribute toward other investments -- such as retirement -- and delegate more income toward savings and experiences. For many, with homeownership no longer regarded as a benchmark for success, the new American Dream includes an updated component: Renting. 

Written by Chase Harrington, President of Entrata.