Although homeowners are richer than renters, an interesting shift has occurred in the American rental market. A new wave of high-income renters
Even with high incomes, homeownership is still out of reach for many Americans. The steep cost of purchasing a home in addition to other financial burdens has made owning a home a difficult proposition for many. Those who cannot overcome these hurdles are opting to rent. Now more than ever, wealthy Americans are demanding rental options.
This change is prevalent in both rural and urban America, but it growing fastest in mid-size cities powered by strong economies. Three Californian cities top the list for high-income renters: San Jose, San Francisco, and Los Angeles. In these pricey markets, wealthy people choose to rent instead of own.
Apartment List uncovered four key factors that are encouraging this shift in the rental market.
- Multi-family construction has quadrupled since 2010, at the high-end especially. It now exceeds pre-recession levels. Luxury apartment complexes with beautiful amenities are available for the wealthy at decent prices.
- Millions of single-family homes are now more often being converted into rentals after being vacated during the foreclosure crisis. Taking advantage of the resulting low prices from the economy, many investors bought up many of these homes and converted them into rental properties. These types of homes are the fastest growing supply segment in the housing market.
- Many high-earners increasingly value the flexibility afforded by renting and want to live close to high-paying jobs in city centers. This is especially true in popular cities like New York and San Francisco, where owning a home near the city is immensely expensive.
- Even with high-incomes, many are locked out of homeownership by the growing cost of affording a home while managing student loan debt and stricter lending standards. Income has grown at a slower rate than home prices.
High-income renters are becoming an increasingly large population in San Diego.
However, Denver and Austin lead the nation in growth of high-income renters… and it’s not super close. These two metros housed nearly 2.5 times more six-figure renter households in 2017 than they did in 2008. Mid-size cities like Oklahoma City, Memphis and Nashville also have seen large growth in this segment
This post was written by Justin Chaplin. Justin is a content marketing associate for Apartment List, an online apartment marketplace.