10 Things That People Used to Own, but Now Rent

Logo from "RENT" the musical

This image was totally borrowed from the creators of "RENT."

Following up on “Occupy Everything” from last week, here’s a list of 10 things that have seen a shift from owning to arrangements that are a lot more like renting.

10. People
Yup, I went there. For the greater part of history it was considered okay for people to own other people. In fact, slavery was not abolished worldwide until 1981, when Mauritania finally got with the program.

And let me say right here: I do not think it is a good idea for people to be able to own other people. I do not endorse slavery at all.

We have, globally, become a culture where “renting” people is the only acceptable option. We pay them in wages or in trade for their skill and labor. While the system of working for pay is hated by many, it is certainly better than the alternative.

This is a case where owning has been orphaned from all of the good feelings and thoughts that normally come with it. The mental image of the slave owner in many of our minds is still unfortunately that of someone with power and wealth, but the impression we get is very negative, especially when compared to our more cheery views of a home owner, a business owner or a patent owner.

So, not every transition from owner culture to renter culture is bad. No matter how crazy it may seem for society to discard an entire type of ownership, it has happened before and therefore could certainly happen again.

9. Empty space
Rented self-storage came about in the 1960′s, and really took off starting in the year 2000 or so. Before that time, people simply did not have as much stuff. People stored items in attics, barns, warehouses, sheds and cellars across a landscape predominantly occupied by single family homes and apartments or tenements. These days, states have written entire new sections of legal code to deal with this new kind of rental, which now serves one in ten American households. (Source)

Look familiar? Thought so.

It is my guess (although unproven) that self-storage became necessary with the rise of the condo, which arrived in Puerto Rico in 1958 and the rest of the US shortly afterwards. As home owners moved away from property with land that allowed for sheds and attics, and mass production of items made former luxury goods accessible to all, empty space that could be assigned to individual renters suddenly became a premium item.

8. Tools
The tool & equipment rental industry is substantial even in an economic slowdown. It brings in $5 billion annually in the US and employs close to 35000 people. It includes sub-industries like the rental of construction tools, yard tools, catering supplies and theatre equipment.

With 60% of the tool rental income coming from the wounded construction industry, there has been a big drop in profit over the past 5 years. Even so, as the economy recovers there will be a whole new group of contractors who have had to sell off their tools during the down times. They will join the traditional customers of tool rental companies at the start of the recovery, renting the larger items until they’re back on their feet. (Source)

Also growing in popularity is a more informal kind of tool rental. This article over on Mint.com lists some of the larger websites that coordinate person-to-person rentals of items like wheelbarrows, lawnmowers, baby furniture and even parking spaces. Even the City of Chicago got in on the deal over the 2011-12 winter season, launching ChicagoShovels.org which allows neighbors to go splitsies on snow blowers.

7. Spouses
The “disposable” marriage has caused a lot of hand-wringing and finger-pointing. The mass media takes a lot of the blame for focusing too much on divorcing celebrities and five minute marriages. While the glossy mags do influence thinking by keeping the idea front and center, I think that the increasing divorce rate is more due to ability than exposure.

Ouch.

In the US until the 1970′s, the only divorces that were allowed were “at-fault.” One of the spouses had to commit some sort of crime or injury to the spouse before the divorce would be granted. With the rise of the “no-fault” divorce, where couples could divorce simply because they no longer love each other, the divorce rate slowly grew. Over the past 50 years, it has gone from 10-15% to now 40-60% of all US marriages likely ending in divorce. (Source)

The idea of the “starter marriage” entered the modern slang with a 2002 self-help book, The Starter Marriage and the Future of Matrimony by Pamela Paul. It’s definitely taken hold of the US – 46% of weddings in 2009 were remarriages for at least one of the two spouses. (Source)

I think there’s also a second level of “own vs rent” at stake here. There was a time when the bride’s family would have to pay a lot of money to the groom’s family – this was called a dowry. (There was also the bride price, which went the other way around.) Basically these were the purchase prices on a spouse. Once paid, they sealed the traditional vows in ways that made it far more difficult to just walk away from a failing marriage. These days, the concept of dowry and bride price have remained strong in certain cultures, but in western marriages they are rarely seen.

The entire concept of marriage has moved away from the pre-1960′s stereotype where the husband essentially became the owner of the wife. The whole “honor and obey” thing is no longer a vital part of many wedding vows, and when it does appear it seems old-fashioned to those observing from the outside. The idea of arranged marriages to further the financial aspirations of a family – marriage as a business deal – has fallen off. Spouses do not own each other anymore, for good or for ill. Marriage in the US in 2012 is more akin to signing a years-long lease on a person’s love life: renewable so long as it remains convenient for both parties, but easily terminated when the arrangement no longer suits your lifestyle.

6. Furniture
Renting furniture and similar consumer goods has become steadily more popular. While the furniture rental industry brings in about half of the income of the tool industry, it employs twice as many Americans due to the smaller shops, larger items and more personal nature of the deals. The most recent US Census report on the industry saw a gain of about a billion dollars in revenue during the real estate boom years from 2002-07, although industry reports indicate that we have retreated from this peak due to the recession. (Source: [1] [2])

For those who like to redecorate often, or for outfitting single-purpose rooms that will only be needed for a short period such as nurseries and student apartments, furniture rental can be a worthwhile way to go. If the choice is between a rental bed for a year or an IKEA bed which will probably not hold up if moved from one apartment to the next, you might be better off with the rental.

5. Website Domain Names
For those of you have built your own website, this will be pretty obvious. For those of you who haven’t, here’s a crash course in domain names, or “dot coms.” The name you type in to get to a website is called its domain name. Examples are “facebook.com” or “google.com” or “livejournal.com.” There are other kinds of domain names besides the ones ending in .com, like “irs.gov” and “northwestern.edu”.

Much like telephones, every computer connected to the internet has a specific underlying number that can be used to reach it. The web runs on these numbers – they’re called “IP addresses.” Domain names are like 1-800 numbers – they’re easier to remember and each one points to an IP address.

When you own your own domain name, like I do with “strawstickstone.com”, you can tell the internet to assign that domain name to any computer with internet access. In fact, the original first draft of this blog was hosted on a computer in my living room. (I’ve since moved it to a much better host!)

As long as I make an annual payment for my domain, keep it pointed at the right computer, and don’t use it to break any major laws, my site will stay up on my own terms. I have free rein on what to do with it. If I want to completely redo the entire look and purpose of the site, I can do so. I cannot be evicted from my domain name.

Domain names are registered for specific periods of time. For example, Facebook.com as of this writing is registered through March 29, 2020. So they’re pretty much a rental situation from the get-go, but in a very long-term way. There’s a difference, though, between a the classic, purchased domain names the temporary account addresses that have popped up more recently.

XKCD by Randall Munroe can be found at xkcd.com

Rented domain names are usually three sections long, for instance, “unclejoe.tumblr.com,” “mywedding.blogspot.com”. (Note: those are probably real blogs, but I have no idea what they are. I’m not checking. I’d suggest you don’t either.) Your “rent” payment is a combination of your personal information that you enter into your host’s servers, and the content you create which brings people in to view your host’s advertising banners. When you use someone else’s domain name, you become like a sublet under the domain owners’ master lease. They’re the ones who tell the internet if your site should appear when someone types in the address to your page.

If Tumblr or Google decided to shut down your account, your visitors would no longer be able to open up a page at those addresses. If Facebook forgets to pay its registration bill in 2020, your Facebook profile will suddenly disappear for a bit, along with the entire rest of Facebook. You can be evicted at the whim of the owner of the master domain name. However, as a tradeoff, you don’t have to worry about keeping track of when your domain registration will expire, and you don’t need to deal with things like DNS servers and paid web hosting.

The ability to rent vanity domain names from other companies became more commonplace after the invention of the Personalized URL in 2000. (Source)

4. Media (Music, Movies, Software, Books)
You guys knew this would be on here somewhere. Downstairs in my living room you’ll find my collection of books, CDs, and DVDs for movies, video games and software. You’ll even find some cassettes and vinyl. Up here in my office I have all of my system discs for my assorted computers (6 at this time) sitting in a nice neat binder. That’s how media used to be. These days I feel like a relic.

In 2009, in a sad case of irony, Amazon reached into the Kindles of consumers who had purchased electronic editions of Animal Farm and 1984 by George Orwell and removed them remotely. Apple has rendered software unusable by releasing patches to iTunes and iOS. Nearly every media producer has tried to implement some version of Digital Rights Management (DRM) protection in an attempt to prevent users from copying and pirating their material. Licensing deals for software-as-a-service programs allow people to use software for specific timespans, after which time their access is turned off or severely limited. TurboTax is the most well-known of these that the average Joe might know about, and the real estate industry’s MLS is another.

On the one hand it’s great that more durable materials and the expansion of the internet have allowed us to reduce environmental waste by sharing our media with each other through companies like Netflix. But the tradeoff is the loss of control over what the consumer can and cannot do with the media once its in our hands.

Meanwhile, the storage of our own files has been increasingly outsourced. Cloud hosting of files through services like Google Docs, Dropbox and Ubuntu One have made our data easily accessible regardless of our location without having to do the old school setup of FTP servers. Data is only as secure as the weakest link in the chain of servers it must travel through in order to reach its final destination. Cloud storage is certainly convenient, but there is a definite loss of control involved on the part of the user.

3. Money
“Wait,” you say, “now she’s really reaching for it. How do you rent money?”

Suppose I go to a landlord and say “I will pay you $700 per week to use your storefront on Main St for the next 3 months. When I am done with it I will return in in the same condition.”

The landlord says, “Certainly, here is your lease agreement, here are the late fees in case you do not pay on time. As a benefit of renting with us you get access to the laundry room, free coffee in our office, and we will shovel your walks.”

Now, suppose I go to American Express and say, “I will pay you 15% interest to use your money for the next 3 months. When I am done with it I will pay you back in full.”

AmEx says, “Certainly, here is your cardmember agreement, here is the late penalty in case you do not pay on time. As a benefit we will rescue you by helicopter if you are stranded in the mountains.”

While obviously AmEx is giving me the better deal here, especially if I want to go mountain-climbing, the arrangements are actually quite similar.

Credit card usage has grew from 51% of the US households in 1970 to 73% by the year 2000, and to 81% by 2009, although that number has since fallen back down due to the recession. (Source: [1 (pdf)] [2]) Although the rise of the debit card has seen more Americans taking back ownership and only paying out of the funds they have on hand, large purchases still require rented money, either in the form of credit card use, mortgage loans, car loans or similar agreements.

2. Cars
There’s a lot of different ways to get your driving on. You can buy a car with cash from a dealer or another owner, but you can also buy with borrowed money, lease a car, or share a car through services like iGo and Zipcar.

Short term car rentals, like hotel rooms, have always served a particular niche market. But longer term leases are also available and the reaction of the public to the idea of leasing a car has seen some interesting trends in recent years as illustrated in the following chart.

Line chart of Vehicle sales and leases in the US over a 20 year timespan

The chart above shows the trend in car buying and leasing over the past 20 years, based on data provided by the US Bureau of Transportation Statistics. Of interest is what happens to the leasing numbers (the orange line) compared to the other lines – it stays pretty consistent while the others saw a drastic dip in time with the recession. Meanwhile, used car purchases fell off dramatically, indicating that the leasing market picked up some momentum from defecting former used-car buyers.

Meanwhile, car-sharing went from a non-entity to a $6 billion industry in the same 20 year span according to The Economist.

Finally, let’s look at what’s happened with car loans over the past 20 years, courtesy of the Federal Reserve.

Line chart showing loan-to-value ratio on car loans over 20 years

Courtesy of the Fed. I knew they'd be good for something someday. Shaded areas indicate recessions. Click to expand.

Very interesting, no? This shows the average loan-to-value ratio of car loans. The higher the line gets, the greater percentage of the purchase was handled via loan instead of cash. 20 years ago financing was averaging at around 90%, then it crept up slowly.  2004 saw a massive drop down to 81%, then a sudden rise to a peak of 100% almost immediately afterwards – people buying cars with no money down – in early 2005. The past 6 years have shown a dramatic dropoff in the amount people are borrowing, but I should note that the end point is still at about 80% loan. If people are borrowing to pay for their cars, they’re borrowing one heck of a lot!

1. Housing
Recent reports from REIS, Inc as reported in assorted newspapers indicate that apartment vacancy rates nationwide are at their lowest since 2001, dipping below 5% nationwide. Big blogs and magazines are trumpeting the stats as reasons to buy rather than rent, but for a population battered by short sales, foreclosures, student loans and car loans (see above) there are few opportunities to buy property. (Source: [1])

Less supply means higher prices across the board, although with the rapid year-over-year rent growth seen in Chicago (as illustrated in last Friday’s Rent Bacon) there will come a point where rents simply cannot go any higher and still be attractive for tenants. It also means shorter market times, bidding wars, and a need for higher credit scores in order to obtain an apartment that isn’t a complete dump.

There’s a lot of hype out there trying to persuade renters who can afford it to buy property. Personally I think that sensible people will choose the mode of homeownership that’s best for them, but with a culture so heavily biased towards rental throughout every aspect of our lives it can be tough to see the value in actually planning, saving for and purchasing a piece of real estate. It is not my place to say you should buck the trend and buy your next home. Ownership requires commitment, dedication, and often a willingness to take something that’s not quite perfect and make it so. However, it gives you control and rights to your property that you would otherwise give up.

Wrap-up
I don’t necessarily think that this trend towards rental is a negative thing for every item on the list. After all, as item #10 states, sometimes a shift from ownership to rental can be good for the overall state of humanity. There is a difference, though, between having ownership-level control over your music collection vs your living space. I do think it’s important for young Americans to take some pride in ownership and to know that it is possible. So, next time you acquire something, give some thought to whether you’re becoming the new owner or merely borrowing it. If you’re renting it, make sure you understand the rights that you are giving up in order to do so. Think about the message that you are sending to the next generation watching your actions. If it’s still okay, then go ahead and rent it. If not, maybe it’s time to start pushing this trend back in the other direction.

“RENT” logo is totally property of the creators of “RENT” the musical.

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