Thursday, April 17, 2008

Renting isn't such a bad thing?

Here's an interesting graphic from BusinessWeek that shows debt as a % of disposable income for renters vs. home owners. Not doubt, the stats include hard hit areas like California, Arizona, Florida, but the takeaway is more subtle than the title...

According to the graph, renters have supposedly seen their obligations as a % of disposable income decline over the past 7 year housing boom vs. while homeowners have seen the opposite effect. But on a relative basis, maybe homeowner's wages haven't expanded as fast as renters or renter's have controlled their costs better in an effort to save for the eventual house?

Either way, seems to me that the net effect is better a homeowner has a more favorable free cash flow (relatively speaking), since while homeowners have seen their %'s rise, the % is still lower than renters.

This chart seems simple, but it's not as obvious as you think, it's actually pretty subtle and makes you think.