From Cars And Clothes To Caskets, Renting Is The New Normal For Personal Finance

The days of owning everything from cars and apartments to clothing and furniture may be numbered.

According to a report by Intuit Credit Karma, more Americans are choosing to rent goods and services because of affordability and lifestyle preferences.

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Beyond traditional rentals like cars and apartments, the rental market has expanded to include everything from power tools to designer handbags and funeral caskets. Now, 28% of adults routinely rent goods and services, which rises to 47% when housing is factored in.

Higher prices are the primary driver behind the growth in renters, but some people simply prefer the flexibility and convenience of renting over owning. The shift toward a "rent-first" lifestyle is reshaping how Americans consume goods and services.

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Renting is no longer just about affordability. A recent survey found that 58% of respondents value renting for its flexibility and ability to avoid overconsumption. This is particularly important for Gen Z and millennials, who are increasingly concerned about their consumption habits’ environmental and social impact.

"Renting is a great option for many people," Florida-based certified financial planner Carolyn McClanahan told CNBC. "Some people do great renting clothes and, for special events, this can be good. However, if you know you have a lot of special events, a few really good [owned] pieces can last a long time."

Clothing costs have skyrocketed due to inflation, with men's and women's apparel prices increasing by 15% and 13.3% since July 2020.

Meanwhile, the allure of car leasing may be fading. While monthly lease payments are often lower, long-term costs can be higher than financing a car.

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Leased cars also often come with built-in service costs, and they can have mileage restrictions and hefty fees for excessive wear and tear. If you finance a car, you'll own it at the end of the loan term.

Because housing is often the most significant expense, renting may be a practical option.

"Unless you are absolutely sure you are dedicated to being in a home for at least five years, you should definitely rent," McClanahan said. "Only when you are settled with life, jobs and family is when it probably makes sense to buy a home."

Dottie Herman, vice chair at Douglas Elliman, said it's not as important to millennials to own a house as it has been for other generations because they're more likely to delay marriage, start a family or relocate for a job.

"This generation is different," she said. "They believe in homeownership, but now there is a choice."

Higher mortgage rates and a limited housing supply have made homeownership challenging for many Americans, especially young adults. As a result, renting has become a necessity for many who simply can't afford to buy.

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A recent Bankrate report found that nearly three-quarters of would-be homeowners cite affordability as their biggest obstacle, and a Credit Karma study revealed that half of young adults believe homeownership is only attainable for the wealthy.

Michael Krowe, director of financial planning at Edelman Financial Engines, cautions against being pressured to buy a house when it doesn't make sense.

"Don't make a home purchase simply because you think it's going to surge in value," he said. "You might think your home is an investment – it's not. Your home is a place to live."

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