More and more millionaires are stepping on the everyman’s corner and renting apartments rather than putting down roots and money to become homeowners.
Roughly 43 million families across the country currently live in apartments—the highest level in half a century, according to a new report from apartment search site RentCafe. Included in that historic number of renters is a record-high number of millionaire renter households: 3,381, a number that tripled from 2015 to 2020, according to data RentCafe gathered from IPUMS.
The share of high-earning renters, categorized in the report as households making $150,000 or more a year, increased by 82% over the last five years, which is the largest jump from any renting income bracket.
In part, the rise in high-earning renters can be attributed to the increasing associated cost of homes, especially in more costly cities those renters seem to be drawn to. “This becomes even more obvious when comparing home prices to renter income in the cities with the highest increases in high-income renters: In nine of the 10 cities where the number of top-earning renters leapfrogged considerably, growth in home prices was higher than the national average (29%),” RentCafe wrote.
The reasoning for more millionaire renters hopping in the market was a little less defined. RentCafe chalked it up to a matter of “comfort and smart investing.” Owning a home can come with more than its fair share of maintenance and costly repairs and upkeep. Then there’s the flexibility renting offers one to move from city to city for career opportunities. It’s worth noting that millennials, who tend to have a different relationship to buying a home, make up a majority of millionaire renters at 28%. “Additionally, some high-earners, including some millionaires, prefer to funnel their cash into other types of assets that hold value,” RentCafe wrote.
It’s no surprise that wealthy renters live mainly on the coasts. While New York had the highest number of millionaire renters, San Francisco, which came in second, had the biggest spike in millionaire renters between 2015 and 2020.
The only income group to see a decline in the number of renter households was those collecting less than $50,000 a year, who fell by 11% in the rental market, according to RentCafe. Some, the report said, would have moved up into other income brackets, but a large portion of the roughly 3 million renter households that were lost were priced out of those markets.
In places like New York City, the dynamic has created a housing crisis in which those with more means have begun bidding more to rent apartments. The same goes for Midwestern cities like Chicago. While rents for one- and two-bedroom apartments in places like NYC and San Francisco have slowly started to decline, according to national data from rental site Zumper, they’re still more expensive than in January 2022.
“Rental demand is still relatively high, thanks to chronic undersupply in most markets plus many people opting out of the buying process,” CEO Anthemos Georgiades said in Zumper’s recent report. “Asking rent prices will likely continue flattening, but don’t expect them to come to a skidding halt.”
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