We will soon own a lot less stuff
The next few decades will witness a massive decline in ownership. Renting, not owning, will become the primary way people in the first-world consume.
The last century saw an enormous increase in ownership. This change was spurred by a few factors:
- Wealth: society grew much richer over the past 100 years.
- Convenience: having your own property available to you all the time, e.g., your car, has been much more convenient than the alternative.
- Technology: the advent of big-box stores and the Internet made it easier and cheaper to own than before.
And thus, we have way too much stuff. In fact, everyone, even the some of the poorest Americans, have tons of things we don’t need and no longer want.
But this will change. We will soon become a nation of renters. We might still own the very essential things (like our smart phone) or things that are used very often (like underwear), but there will be little need to own things we use only occasionally (a fancy pair of shoes, most jewelry, or that really nice pizza-making set).
The things we might want to rent fall into three categories:
2. Things we need for a finite period of time, like baby’s clothes. We might want to hang on to one or two cherished items, but most of our baby’s clothes go to waste after the child grows.
3. Things we need only once, like a hotel room. When I go to Kansas City for two nights, I am not going to buy a house.
Paradoxically, some of the same forces that have made it so easy to buy will soon make it much easier to rent.
Technology: Much of the newest technology in the last decade has focused on renting rather than owning. It is no longer smart to buy music – you can rent every song in the world from Spotify. Instead of buying movies, you can watch them on demand on Amazon Prime or Netflix. ZipCar gives you the flexibility to drive whatever car you fancy at the moment – sometimes you’ll want a sports car and other times you’ll want an SUV. Attending a ritzy party? You can rent that designer ball gown from RentTheRunway.com instead of spending a fortune to own it.
Unpredictability: Our world is now perceived as more unpredictable than it was a generation ago (especially for Americans). A hard-earned asset like a house was once a sign of stability, but in the past ten years owning a home became a ruinous liability for many. Without certainty about the future, ownership is high risk.
Convenience: While owning is often more convenient than renting, technology and business model changes have made renting really easy (and, in some cases, even easier than owning). For example, with car sharing services you don’t have to worry about obtaining insurance or finding a parking spot.
Population Density: More people are choosing to live in dense urban areas. This means we all have less room for stuff. Shrinking living spaces makes it increasingly impractical to own things like winter sports gear, larges tools like table saws, and other occasionally used items. Additionally, renting is much easier when there is a high concentration of people because warehouses and depots can reach high utilization.
Environmental Awareness: Creating stuff we own but no longer need is a big contributor to environmental harm. As some of the population grows more concerned about the health of the environment, many will consider renting a less wasteful way to consume. While recycling helps mitigate the damage caused by the things you own, renting leaves an even smaller footprint.
Over the next 20 years, we’ll see a huge movement toward a renter’s world. The second order effects of this shift will be both positive and negative. Positively, people will be able to have more choice, convenience, and opportunity to experiment. Negatively, the decline in ownership will undoubtedly hurt economic growth, with potentially catastrophic implications for countries like China that make much of the world’s stuff.
Like with many economic problems, change is dictated by our ability to solve market inefficiencies. The things we own that we don’t use regularly are wastefully underutilized, and it is only a matter of time until those inefficiencies were cured. That time, the time of renting, is nearly upon us.
Special thanks to: Kurt Tsuo and Michael Safai