Renters across the globe are spending an unprecedented $1.1 trillion on new homes in 2017, according to a new report from research firm RealClearMarkets.
But what exactly is a rental house?
Renters in Berlin have spent $3.3 trillion to buy homes in the past decade, while in the U.S. and UK, rental properties account for $2.7 trillion, according the research.
The average annual cost of a single-family home in the US is $1,827, while a two-bedroom apartment is worth $1 to $2,000.
That means the average new-home rental is almost $400,000 cheaper than the average income of the average homeowner.
And while renting can be a good way to save, there are many reasons to rent.
Renters may save on rent by purchasing their homes in areas that have high rents, such as New York and Los Angeles.
Or they may not be able to afford to buy in these areas, as many renters have had to move to lower-cost locations.
Renting can also be cheaper than buying, but the difference is that a mortgage is much more expensive, which may drive people to rent out their homes.
Rentals also offer a more affordable alternative to buying than buying outright.
“Rent is often seen as a way to make ends meet or to provide security to a family,” said Michael Kugelman, chief economist at real-estate analytics firm Zillow.
“It is very hard to buy.
The difference is buying in the long run is a much better investment.”
A lot of the research suggests that if you’re a single adult, renting is probably a better investment than buying a home, and that a big reason why is because you’ll have more money to invest.
“You have more options for investing and it’s cheaper,” said Kugelman.
Rent vs. purchasing, then, is the key difference between renting and buying a house, said Alexia Todaro, a senior analyst at real estate research firm Zellner.
Rent and buying can be very different, and in a lot of cases, they’re not mutually exclusive.
For example, renting can help a family stay in their home for as long as possible, while buying a bigger house is often a better long-term investment, Todoro said.
“If you’re buying a big house, it’s a good idea to rent,” she said.