Patrick Lee went from homeowner to home renter this year.
It may sound like a downgrade, but the New Yorker didn’t make the switch because he couldn’t keep up with payments or because he lost his job. Instead, Lee was nervous about the state of the housing market.
So in March he sold the Manhattan apartment he bought in 2008 for about the same price he paid and moved — along with his wife and child — a few steps away into a luxury, two-bedroom rental unit in a brand new building.
Lee wouldn’t disclose what he’s paying, but similar two-bedroom apartments in the building usually rent for $11,000 a month.
“I wanted to protect ourselves from prices going down,” says Lee, who is a managing director at a major bank. “I didn’t want to be an owner anymore.”
Lee has company. Demand for luxury rental units has increased as wealthier individuals who can afford to buy are deciding not to, according to brokers and real estate analysts in affluent areas of the country such as New York City, Chicago and San Francisco.
“More affluent Americans are opting to rent as oppose to buy,” says Jack McCabe, an independent real estate analyst and CEO of McCabe Research and Consulting in Deerfield Beach, Fla. “Within the last year, so many people have seen their family and friends get burned in real estate. They don’t see it as being a risk free investment as they used to.”
Lee says that he’s the first of his peers to make the switch to renting. But that doesn’t mean they don’t want to.
“I suspect a lot of people are underwater and can’t get out,” says Lee. “A lot of people are just stuck.”
He says he doesn’t regret selling his apartment and moving to a rental, especially since the building he lives in has all the amenities and handiwork of his previous place. And he can rest easier knowing that if he has to relocate for his job, he can leave without having the burden of trying to sell an apartment.
“With so much uncertainty,” says Lee, “It gives me a lot of peace of mind.”