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Growing lifestyle choice: middle class and renting

July 09,2016 23:15

Since the housing crash a decade ago, the Mercados are among a growing number of adults age 35 to 54 in Gainesville who rent instead of owning a home, whether due to financial hardship, lifestyle choice or the transient nature of a college town.


Rebeccah Mercado and her husband, Dionisio have owned homes in Gainesville and Orlando, but when they returned to Gainesville two years ago so she could go to graduate school, they decided to rent since they weren't sure how long they would be here.They feel better about the prospects of buying again since she also landed a job as a research coordinator for UF Health, she said, but the position is paid by temporary grant funding.“We’re still not entirely sure we’re going to stay,” said Mercado, 38, who lives in a two-bedroom apartment at Lake Crossing in northwest Gainesville with her husband, who is 42, two sons ages 12 and 3 and a dog.Since the housing crash a decade ago, the Mercados are among a growing number of adults age 35 to 54 in Gainesville who rent instead of owning a home, whether due to financial hardship, lifestyle choice or the transient nature of a college town.Gainesville is among the top 20 percent of all metro areas in the nation where adults reaching middle age — who are historically more likely to own homes — instead are renting, according to an analysis by the Associated Press. Figures show rental properties are housing larger households and a growing share of rentals are single-family homes.From 2009 to 2014, the share of renters age 35-54 in Gainesville was up 8.1 percent, the seventh-fastest growth among 131 midsized metro areas, to 38.2 percent compared to a national average of 34.6 percent.The number of people per rental household in Gainesville was 2.4 in 2014 compared to 2.52 nationwide, but with an 11.1 percent increase since 2009 that was the ninth fastest growing of 131 midsized metros.The share of single-family homes among the rental stock in Gainesville rose 2.8 percent from 2006 to 2014 to 22.2 percent, although that was below the national average of 28.2 percent.Sandra Adams, 48, is among those with a large rental household in a single-family home. She rents a four-bedroom house near the Meadowbrook Golf Club in northwest Gainesville with her husband, three stepkids and a dog.When they moved to Florida two years ago for her husband’s job with the city of Alachua, she said they first looked for good schools — moving to a neighborhood zoned for Buchholz High — and decided to rent until they got a better feel for the area.“You kind of don’t want to buy right away until you know you’re in a good area,” she said.Adams said they have only recently started thinking about buying, looking at their credit report where she said they have some old debts she knows they can have removed, and checking home prices at Zillow.com to see how their house payments might compare to their $1,430 monthly rent, while also considering property tax rates and utility bills.“We’re hoping to get into a house that maybe our house payment will go down,” she said.“We know that we’re going to be here for awhile. I think we’re in a position where, why not put the money into ourselves instead of somebody else’s house payment?”Corey Harris, executive director of the Neighborhood Housing and Development Corp., said increasing rental costs are giving people an opportunity to buy houses and pay less in a monthly mortgage than they pay in rent, but many are unable to buy because of credit problems, lack of a down payment or employment issues.The local nonprofit builds and rehabs housing for rent and purchase, and provides classes and one-on-one counseling to people interested in buying a home, among other services.Harris said they are seeing more people interested in buying a home this year, but many would-be buyers are still reluctant after going through the housing crisis.“They want to make sure when they purchase a house that the dream doesn’t turn into a nightmare,” he said.A lot of clients in their 30s and 40s are single parents with one or two children, Harris said. They may have enough income but lack the down payment or have credit issues because they used credit cards to make ends meet or didn’t have the knowledge to make sound financial decisions.Others may have the down payment but can’t show the two years of steady job income that lenders require, perhaps because they have changed jobs or, as is sometimes the case with that age range, they became independent contractors or are self-employed.Harris points out that beginning teachers and police make about $35,000 a year, so they can typically afford a $100,000 house to avoid paying more than 30 percent of their income on housing — the federal standard for distressed housing costs — while the median home sale price in 2014 was $170,000 and has been rising since.“That means those individuals who are vital to keeping our communities intact and really are the fabric of our communities — our educators and those people who keep us safe — those individuals starting their careers can’t even afford the housing we have,” he said.Longtime rental property manager Keith Crutcher said even though many people would pay less for a mortgage than they pay in rent, the problem is coming up with the down payment.He owns Villas at Ashton Square off Tower Road where a three-bedroom apartment rents for about $900, but very few of the working-class renters there leave to buy a house, he said.“Making 40-grand, to save 10, 15, 20 thousand is a little tough,” he said.The AP found a growing divide between renters and owners. Those who already own their homes were able to refinance to benefit from historically low mortgage interest rates that lower their monthly costs, while renters face higher rental and buying costs with wages that have not kept pace, making it more difficult to save for a down payment.The data compiled by the AP actually shows Gainesville’s rental costs decreasing 3.4 percent from 2009 to 2014, although owner costs decreased more at 7.9 percent. More recent information from ALN Apartment Data shows rental costs in Gainesville increasing 6.5 percent from June 2015 to June 2016, on top of a 3 percent increase the year before.In Gainesville, 24.1 percent of homeowners were considered stressed in 2014 compared to 27.4 percent nationwide. Compared to 2009, 5.1 percent fewer owners were stressed in Gainesville and 2.5 percent fewer nationwide.Among renters, 54.1 percent in Gainesville were stressed in 2014 compared to 48.3 percent nationwide, but while the national rate was up 2 percent over 2009, Gainesville’s rate was down 1.1 percent.In many cases, the AP found that the middle-age renters can’t afford a house or have faced a financial setback and returned to renting.Secure Investments Realty & Management Corp. manages a lot of single-family housing rentals in Gainesville. Laura Garcia, assistant property manager, wrote that a lot of their non-student renters such as the Adams family are Generation X, some with stable jobs who say buying is on their radar “but it is always ‘in a couple years.’”Tanya Chappell, broker and president of Secure Investments, said that middle-aged demographic is the generation largely affected by the housing crash and who are still gun-shy about buying.“A lot of people lost a good amount of savings, so they’re just afraid to get back into that,” she said.She said they see people who used to be homeowners who are trying to build their savings or repair their credit so they can buy again.Chappell said she is seeing more parents living with their adult children, either so the children can take care of aging parents, or parents moving with their kids when they come to college — “much to their kids’ dismay.”“It’s an indicator of people needing to conserve their income or not willing to pay for two houses,” she said.As rent prices increase and incomes don’t keep up, Harris said, more people are moving in with family members.The Mercados reflect the large transient population in Gainesville, with many adults here in medical residencies, graduate or undergraduate programs and short-term job assignments.“I have a lot of friends in that same situation, here for a short period, not sure if they’re going to stay as faculty,” Rebeccah Mercado said. “I hear it a lot. Nobody expects to stay until they get a faculty position.”With so many students and transient workers, Gainesville’s home ownership rate of 55.2 percent in 2014 ranked 18th lowest of 353 metro areas, compared to the U.S. rate of 64.6 percent. However, Gainesville’s ownership rate actually ticked up slightly from 2009 — 0.28 percent — while the national rate dropped 2.53 percent.Rental property managers in Gainesville said for some middle-aged tenants, renting is a lifestyle choice and not a matter of financial hardship.At The Flats of Tioga in Jonesville, where rental rates are “are in the 99th percentile” for Gainesville, less than half of the tenants are on short-term contracts with the University of Florida or other employers, while a majority are multi-year tenants, said Gil Levy, president of Tioga Town Center.“They don’t want all the associateds of owning a home,” he said. “We take care of all the maintenance, painting. Basically, we pay the taxes, the insurance — they pay for it in their rent — and everything associated with it is taken care of. If there’s a problem with the unit, they call a property manager and it gets taken care of.”Tioga residents also like living near a fitness center, coffee shop, doctor, dentist and restaurants, he said.The apartment lifestyle was also a consideration for the Mercados. Rebeccah Mercado said Lake Crossing has a pool and a community of kids the same age as hers, and not having to keep up with lawn and pool maintenance maximizes her schedule as an employee, full-time parent and full-time doctoral student. However, she said she and her husband will probably consider buying in a year or so “because my oldest son wants to be in a house.”

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