A few weeks ago, something strange happened in the auto rental industry. Rental car giant Avis Budget Group purchased Zipcar for $500 million. If you don’t know much about Zipcar, they’re a sort of hybrid rental company that offers a form of “car sharing.” Basically, once you join them, you can rent a car for about $8 an hour, or about $72 a day with no ongoing payment plan. Monthly payment plans give you more access and lower costs. Why is Avis betting on Zipcar? It may have to do with that company’s prediction that the car sharing business in North America could grow to $10 billion (according to the ever-bullish Wall Street Journal). The logic of auto sharing is especially attractive to young, urban dwellers. Expensive parking, insurance and so on brings the cost of auto ownership to about $9,000 a year (per AAA).
But the financial (and incidental environmental) advantages of what some call “dis-ownership” may be on the cusp of entering the mainstream—driven to a large degree by the shrinking economic fortunes of the middle class. Take a look at a new company called Airbnb, for example (www.airbnb.com). They allow almost anyone to rent out rooms or properties all over the world. The hotel chains must be trembling. And companies are springing up all over that offer solar PV leasing, such as SunRun (www.sunrunhome.com).
Is home ownership losing its luster as well? Probably not—although older Americans are migrating toward smaller properties. A new homeowner with a 3.5% mortgage who lives in the house for a least 7 years should save about 45% over renting, according to Trulia. But a lot of data is missing from that equation, including property taxes, maintenance and repair. Those variables can easily flip the equation in favor of renting, particularly on older homes. In our view, the smart development money will be on high-performance, multi-unit rental properties that offer a good deal and low overhead for smart, frugal residents.