Many Americans who cannot currently buy a home are renovating their rental homes instead.
Tenants, resigned to staying put until the housing market improves and unwilling to live with bland decor, are swapping fixtures, designing patios, and ordering custom furniture. Online furniture retailer Wayfair inc
Bookings for easily reversible additional services such as the installation of new doorknobs and drawer handles have tripled since last year.
The return on these investments is likely zero, but tenants say they shouldn’t own a home to have a place that feels like home.
“My attitude is that I want to live now and enjoy now,” said Dinah Eke, a 37-year-old pharmaceutical project manager who shares a New York City rental apartment with her husband and their three children and is a renter-friendly DIY tutorials on social media.
Nesting tenants are an indicator that the housing market is at or near a peak, said Ken Johnson, an economics professor at Florida Atlantic University who studies housing and rental markets.
“It doesn’t make financial sense to invest in a property that you rent,” he said. “The reason is that going from renting to owning is incredibly expensive.”
According to John Burns Real Estate Consulting, the cost of buying a single-family home in the US was $888 a month more than renting a home in September. Confidence in the US housing market hit a new low in early November when 16% of Americans said it was a good time to buy a home, according to the Fannie Mae sentiment poll. Lease renewal rates also hit an all-time high last year, according to real estate research firm RealPage.
Priced above the domestic market or uninterested in higher rates on 30-year mortgages, renters are installing temporary peel-and-stick wallpaper, a popular upgrade for those looking to customize their space on a budget.
Temporary wallpaper sold traditional wallpaper for the first time nationwide in August, according to wallpaper seller Spoonflower. According to Chasing Paper, another online seller, peel-and-stick wallpaper sales in major rental markets like New York, Chicago, San Francisco and Austin, Texas are double to triple traditional wallpaper sales. Wallpaper requests via gig booking app TaskRabbit are up 38% year to date.
Kathleen Adams, a 35-year-old marketing strategist and restaurateur, installed geometric patterned peel-off wallpaper in her bedroom in June, just before she signed a two-year lease on her New York apartment.
She moved into the building in 2017, shortly after her bid to buy her own apartment fell through due to construction delays. Since then, house prices in the city have risen 46%, according to the Federal Reserve Bank of St. Louis.
Like most renters, Ms Adams was reluctant to make changes to a space that she did not own. Lease agreements typically require tenants to leave the units as they were on the day you move in. Making changes often means renters have to both pay for renovations and reverse them.
Ms Adams lived in New York for more than a decade before drilling her first hole in the wall to hang a painting during the pandemic. She has since redesigned the cement patio overlooking the street with artificial grass and mood lighting, and commissioned a custom-sized artwork to fill the wall in her living room corner.
“If I spend my summer doing DIY, it means I’ll be here for a while,” she said.
Nesting tenants have given a surprise boost to interior design firms like Havenly, which had been expecting the housing market to cool down. The revenue growth rate in 2022 topped last year, partly due to a 20% increase in tenant spending, said Lee Mayer, chief executive officer of the online company that designs floor plans and sells furniture.
“If you were a renter looking to buy a house next year, suddenly you’re going to be a renter for a few more years,” she said. “If it was only a few months, you probably wouldn’t have put up that wallpaper.”
The majority of Americans continue to believe that housing is a good investment, even as the percentage of renters who think they will ever become homeowners has fallen to an all-time low of 43% over the past year, according to an annual housing survey conducted by the Federal Reserve Bank of New York.
Spending money to modernize a home you rent may not make good business sense, but that doesn’t mean the satisfaction of living in a more attractive space isn’t worth it, Prof Johnson said. Depending on the landlord, tenants can even get the landlord to share the cost or negotiate a rent reduction in exchange for renovations.
“Houses mean more to people than just an investment,” said Prof. Johnson.
Some renters say it can make financial sense to upgrade a rental compared to alternatives, especially in cities where rents are rising.
When Kayla Fory, 30, moved to Los Angeles from San Francisco last year for a job, she settled on a small, poorly lit apartment and immediately began renovating.
Ms. Fory estimates that she spent approximately $1,000 on renovations, including replacing all generic hardware on her cabinets and drawers with antique glass bulbs, updating the lighting fixtures, and removing the blinds and glass shower door in favor of drapes.
“If I walked into an apartment that looked perfect, I’d be spending $1,000 more on rent every month,” she said. “The longer I’m in the room, the more cost-effective this decision was.”
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