Strange Turn Of Events: Wealthy Americans Increasingly Prefer Renting To Homeownership
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Generally speaking, when American households reach the $50k to $75k income bracket they transition from renters to homeowners, but a recent RentCafé study reveals that these US demographics are shifting.
Within the past 10 years, roughly 1.2 million wealthy households with incomes exceeding $150k a year have become renters—from 2005 to 2015 the number of wealthy renters skyrocketed by 217%, a huge leap compared to the 82% increase in homeowners of the same income bracket.
“Typically the majority of renter households make less than $50k a year. Once a household reaches a certain income level, they usually purchase a home,” RentCafé’s Nadia Balint tells Bisnow. “We think after the housing crisis there’s been a change in attitude toward homeownership—people are more cautious about buying and many are continuing to rent."
The top 10 markets experiencing a surge in wealthy renters are Dallas Fort-Worth, Portland, Memphis, Phoenix, Chicago, San Francisco, San Jose, Austin, Charlotte and Detroit.
Nadia says part of the allure of renting for the upper class may be attributed to the increase in high-end apartments made available in the past decade.
“What we’ve found is the increase in wealthy renters has translated into a higher demand for high-end apartments…there are enough high-end renters who can afford the glut and are fueling the luxury apartment supply, keeping rent prices high and vacancies low.”
Also important is that there remains a lack of affordable apartments coming online, as the majority of developers are catering to wealthy Americans' budgets, Nadia says.
“What’s also worth noting is that as new apartments come on the market, the existing apartments get older and they become more affordable,” she tells Bisnow. “This is not to say that it’s keeping up with the demand for affordable apartments, but it’s a trickle-down effect.”