Publication: What’s wrong with renting?

In today’s China Daily… http://www.chinadaily.com.cn/metro/2010-03/19/content_9613637.htm

Real estate is a national obsession. Wealthy Chinese snap up properties as if they are buying stocks or making savings deposits. Less well-off families start putting aside money to buy homes for their children, especially boys, before their little bundles of joy even leave the maternity ward. Young graduates and professionals are increasingly stressed about their ability to afford ever rising housing prices. Everywhere you turn, real estate is the subject of fervent discussion and speculation.

It almost seems that life in China does not start, or stop, until you own your home. Parents don’t consider their duty done until they have saved and scrimped enough to bestow their offspring with humble abodes.
Men have trouble finding serious girlfriends unless they indicate that they are in the process of buying, or already own, a place. Young couples put off marriage to first meet the home ownership prerequisite. Newlyweds postpone having children to focus on upgrading their living quarters.

We really feel uncomfortable without staking our claim to a piece of land or a slice of a towering skyscraper. The numbers say it all: a respected real estate analyst estimates that 80 percent of Chinese own their homes (including government-issued apartments). This is surprisingly high in relation to how swiftly home prices have risen.

Some of that “must own” mentality is indeed fueled by the rapid growth in real estate prices. Buyers in Beijing who set their sights on apartments before the Lunar New Year found that the same properties were out of their budget after the celebrations. This, in turn, has driven a frantic rush to seal the housing deal.

Yet, another interesting statistic adds nuance to the Chinese real estate story. A 2009 national survey indicated “96.9 percent of people cannot accept getting married while renting.” This seems to show that some of our preference to own, rather than rent, is a cultural preference. Could it also be that our attitudes are driven by a materialistic desire to garner the prestige of owning a home?

There is nothing inherently “un-marriagable” about love in a rented apartment, but when I speak to young people it is clear that renting is seen as a second-rate way of life, relegated to those with no choice. When I mention that I have been renting abroad for the last 10 years, other Chinese look at me with a mixture of surprise and pity. So I have taken to asking them, “What exactly is wrong with renting?” Their replies aren’t especially convincing:

“Renting just isn’t stable. Maybe your landlord will only give you a one-year lease. Then you have to move the next year.”

“Girls in Beijing are so practical. The first question they ask you before dating is how much money you make. After that, it’s whether you own a car and a home.”

“My girlfriend doesn’t mind getting married before I buy a place; it’s her parents I have to convince. When we get to talking about marriage, I will have to discuss it with her parents and they will surely ask me what my standards are.”

Young people especially, it seems, are caught up in the social pressure of having to buy instead of rent. I have another view to propose – that renting, while not as prestigious as owning and possibly not as stable, has its benefits. For one, it gives young people the mobility they need to pursue better opportunities wherever they may be. A Beijing renter who gets a fantastic job offer in Shanghai or overseas can just call their landlord, pack up, and be off, without worrying about who will look after their home or selling it at the wrong price.

Even the annoying annual lease renewal process can be viewed positively, as a natural break from routine. On occasion, when one lease ended, I would take the rent money and put it toward plane tickets and hostels. I was essentially “homeless” for a few weeks, but it encouraged me to go see the world. Unlike my home-owning friends, when I was traveling I didn’t have the dual burden of a regular mortgage payment to make at home and the cost of the trip.

I’m not the only crazy renter out there. A popular women’s magazine this month interviewed six couples that rent. All claimed that without tying their income in a home purchase they felt less pressure and enjoyed more freedom to spend on other fulfilling pursuits. Could this be the beginning of a changing attitude among modern Chinese?

I’m not making a financial argument. Smarter, savvier investors than I can do the calculations to prove the benefits of taking on a mortgage.

All I’m saying is that if you feel like you can’t live until you own, perhaps it’s time to adopt a new view on home ownership.

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