Most people who pay attention to the downtown rental market know that it is hot. I should probably capitalize that ‘h’ because it’s just that hot. Most properties that are for rent are full, whereas there aren’t too many properties for sale that are.

Why is this? With so many people moving downtown why is it that so many people prefer to rent as opposed to buy?

The common thought to this is because people don’t want to commit. They’re used to the house in the suburbs, and a downtown loft or condo is a big change. People assume that folks are renting to “try it out” for awhile before they make the commitment to buy.

This makes a lot of sense to me. It’s easier to move after awhile if you are just renting and do not like it. And if you love it you can always move into a place you buy, or extend your lease.

The problem I have with this thought is this. Renting downtown is much cheaper than buying. Seriously. If you can live in a space the same size for less, why would you pay more to own?

I haven’t done a real in depth study of this, so if you’d like me to go more in depth with this later let me know. But here’s what I think.

Places like The Kirkwood sell out quick. You get a large unit in a great building for 1/2 to 2/3 what it would cost you if you bought. Very few people are cash buyers, most are payment buyers. They are looking at a specific price range because that’s the monthly payment they can afford. If you can get over 1,000 sq ft with a great view at Kirkwood for about $1,000/mo, why would you spend $250,000 for a similar unit somewhere else?

Gateway Lofts are moving like crazy right now, I can’t think of one place for sale that has moved as many units this year as Gateway filled last month!

I will freely admit I could be wrong about this, but this is how I would think. Owning is great, but if it’s twice as much money is it really that great?

So maybe the rental market isn’t as full of people on a ‘test drive’ of urban living, maybe they’re full because they provide a better value in the eyes of the consumer?

What do you think? Am I totally off base here, or are the consumers living in downtown Des Moines more saavy than they’re given credit for?