More and more often, renting is a personal choice, rather than a forced option or a decision based on a miscalculated rent-vs-buy analysis.

Freed from the expense and time it takes to sell a home when a better job calls for relocating, career-charged professionals on the go often rent.

Hip, young adults returning to redeveloped city cores rent to the tune of Petula Clark's old "Downtown" ditty to enjoy being part of the in-crowd, retail shopping and the cultural diversity of a 24-hour urban life.

And growing ranks of nest-empty baby boomers are deciding to let someone else worry about maintenance and upkeep around the home.

Only a slight majority of tenants, 51 percent, rent as a result of some circumstance that compelled them to do so. That number is down from the 69 percent who rented as a matter of circumstance a half decade ago, according to Fannie Mae's 2001 National Housing Survey.

For 41 percent of today's renters, says the survey, renting is simply a matter of choice (Seven percent rent for other reasons and one percent weren't sure why they rent.).

Career Track

For certain professionals, making the decision to rent is a no-brainer.

It often would be foolhardy for a professional on a career fast-track to buy a home only to have to move in six months to a year to take the next step up the corporate ladder. The cost of selling one home and buying another would take a chunk out of that new raise.

"Renting is often cheaper than buying if you expect to move soon," says Eric Tyson, co-author of "Home Buying For Dummies" (IDG Books/Hungry Minds, $16.99).

"With real estate agent commissions, loan fees, title insurance, inspections and all sorts of other costs, your property must appreciate approximately 15 percent just for you to break even and recoup these costs," says Tyson, a New England-based personal financial counselor.

Buyers who purchased with little or no money down could be further in the hole waiting for equity gains to get them from behind the financial eight ball.

"Home buyers forfeit some labor market mobility. They occasionally must pass up attractive job opportunities because they are stuck in a house which they are unwilling or unable to sell," said Jack Goodman, chief economist of the National Multi Housing Council.

Given the history of residential real estate appreciation, it's not a good idea to buy unless you expect to hold onto the property at least three years, preferably five years or more, especially if you buy a home in a depreciating market. From the standpoint of gaining sufficient equity in your home, home ownership is a long-term investment.

"You may sometimes experience appreciation in excess of 15 percent over a year or two, most of the time you won't," Tyson said.

Urban Life

Some renters just want to be hip, carefree and "where it's at" and they often don't care what it costs.

The return to downtown America, often by young, childless professionals, but also empty nesters from the baby-boom generation has triggered the development of housing catering to those who demand convenient, maintenance-free living, according to the Urban Land Institute.

Urban infill, often rental-housing that's out of reach for middle and lower-income workers, was the topic at a ULI gathering in Minneapolis earlier this year, where experts said the special shelter is filling a void in inner cities.

Charles E. Smith Companies of Arlington, VA., is building units for those who say they are "renters by choice."

"We go where there is a concentration of 25- to 45-year-olds and those 55 or older with enough income to do what they want. They have lots of choices in where to live, and they go for a convenient location. They want restaurants, groceries, entertainment, shopping and recreation in walking distance," said Alfred G. Neely, president of the Charles E. Smith's development division.

To create the feel of a high-end hotel, the developments include top-quality health clubs, business centers, 24-hour front desks and concierge centers, even cyber cafes, he said.

"In rental housing, the time, hassles and costs of maintenance are eliminated. The management company mows the grass, paints, performs major and minor repairs, and makes sure the property and the apartment are always in good condition," said Terry Feinberg, president of Konnections, a Morgan Hill, CA-based community relations and business development consulting company specializing in the multifamily industry.

"Home ownership also involves significant ongoing maintenance costs, which must be factored into any economic analysis," he added.

Some renters just want a cool pad.

In San Jose, CA, where there aren't enough old commercial buildings to convert to real lofts, there is so much demand for the specialized units that the best of both loft worlds will face off near the city's Compaq Center in an area fast becoming an extension of downtown.

San Mateo, CA-based Castle Group is installing lofts for sale in its conversion of a 96-year old, Del Monte brick cannery complex, but across the street, Alexandria, VA-based Avalon Bay Communities' new Avalon at Cahill Park complex includes lofts built from scratch that could rent for as much as $3,200.

"We are building from scratch and you don't get the ambiance of the old feel of lofts, but I think what people enjoy is that everything is brand new without the creaks you'll hear in the other building," says Jackie Todesco, Avalon's development manager.

Renting also becomes an easier choice when urban rental communities like Cahill Park are near work centers. Time has become the currency of the new Millennium and the reduction in commute times helps improve the quality of life.

"People are tired of long commutes to work, and spending hours in the car to run errands, when they could be spending time with family, friends or however they choose. It is for that very reason we develop our apartment communities near areas of transportation, employment, arts and entertainment -- so that our residents can spend time doing what they want to. In essence, we are giving our residents the gift of time," says Avalon Bay president and CEO, Bryce Blair.

By The Numbers

There's more. Those rent-vs-buy assumptions and calculators that almost always add up to "Buy!" are often self-serving tools used to push mortgages, home sales and the myth that buying is always a better deal.

"We found that most are seriously flawed, with a bias toward ownership. In fact, the cultural bias behind these calculators is clear when you consider that all of these products are designed to help renters decide whether they should buy. None are aimed at helping owners decide whether they might be better off financially by renting," according to a recent National Multi Housing Council examination of the calculators.

"The result is that consumers who rely on these tools may make one of the most important decisions of their lives based on misleading data," the council added.

Take the tax shelter argument -- if you don't own a home you can't take the mortgage interest deduction. You also may not be eligible to take the deduction even if you do own a home.

The mortgage interest deduction lowers your tax bill only if your deductions exceed the amount of the standard deduction (Renters are also entitled to the standard deduction). Even then, your tax savings isn't a windfall. The mortgage interest deduction reduces your income, against which your tax is figured. It isn't as if you get to reduce your taxes by the level of your mortgage interest.

"The true saving is the amount by which total itemized deductions exceed the standard deduction, multiplied by the owner's marginal tax rate. All of the calculators incorrectly assume the tax saving equals the user's marginal tax rate multiplied by the full amount of mortgage interest and property tax paid each year," the housing council found in its test of calculators.

"While this alone is enough to call into question any rent-vs.-buy conclusion, the catalog of online calculator mistakes goes well beyond this," the council added.

Some calculators and pro-buy arguments consider the down payment as a leveraging tool without considering how a renter might leverage that same amount of cash.

"Home ownership ties up a significant amount of money in the form of down payment and equity. This can limit or prevent other investment opportunities, and can put a substantial portion of a household's investment portfolio into one asset," said Feinberg.

For example, a stock-market savvy renter who got in and out of Wall Street's bull market in time during the past boom likely has enough of a return to buy a home for cash.

Had he or she instead put the money in a home, he would have realized a much smaller gain. A home buyer about to purchase a home could easily loose money in the coming year in some communities in California's San Francisco Bay Area Market.

"There are many reasons to buy a home, but most of them are not financial. The investment potential and the tax savings associated with home ownership are often overstated, while the costs of ownership are frequently understated," the multifamily council found.

"Calculating the full cost of ownership is complicated, and online calculators that sacrifice accuracy for ease-of-use mislead consumers and perpetuate the myths about home ownership," the council added.

For more articles by Broderick Perkins, please press here.

Published: August 23, 2001

Use of this article without permission is a violation of federal copyright laws.

Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.