Conventional wisdom has always been that you buy a home because you need to build up equity and have “something to show” for your monthly payments. When you rent, you’re giving that money to someone who can use it to build a real estate empire.
But if you can invest that money elsewhere, there may be better options than buying a home as your primary residence. Even millionaire millennials often choose to rent rather than buy in today’s market.
Data shows that the number of middle- and high-income renters is increasing.
According to research from RentCafe.com, more families are renting apartments than ever before in the past 50 years, many with household incomes above $150,000. According to data from RentCafe.com, the number of renters with incomes over $150,000 increased by 82% between 2015 and 2020.
Another study by GOBankingRates found that $150,000 is well above the threshold for what is considered a “living wage” in every state. The number of renters with incomes less than $50,000 decreased by 11.2%, while the number of renters with incomes between $50,000 and $75,000 increased by 14.5%. The number of middle-income renters, households with incomes between $100,000 and $150,000, increased by 50%.
Meanwhile, another surprising demographic also turned to renting. According to RentCafe.com, the number of millionaire renters has tripled between 2015 and 2020. This can be a matter of “comfortable and smart investing”.
First, owning a home comes with additional time and financial costs for home repairs and maintenance. Renting also has the benefit of mobility, allowing high-income earners to move quickly for job opportunities without having to deal with the task of selling a home.
Finally, in today’s seller’s market, a home may not be the best investment, and savvy millennial billionaires are putting their money toward other assets. This last point is especially true in coastal cities, where housing prices have skyrocketed. Rather than buying a home and risking losses when selling it, billionaires can rent it out in upscale neighborhoods and enjoy the benefits of luxury high-rises without the stress of homeownership. Masu.
San Francisco, which had the largest increase in millionaire renters from 2015 to 2020, is evidence of this philosophy. The number of billionaire renters in the California city increased by 1,629%. Note that the numbers are small. According to a report by RentCafe, there were 17 millionaire rental homes in 2015 and 294 in 2020. We also don’t know whether these billionaires will put down roots by buying homes after the pandemic ends.
What other cities do billionaires attract renters to?
Cities with the biggest increase in millionaire renters
- New York, New York
- San Francisco, California
- Los Angeles, California
- Washington DC
- Jersey City, New York (a suburb of New York City)
Top 10 cities with the largest increase in high-income people
As billionaires flock to the coast, high-income households in many major U.S. cities are also choosing to rent rather than buy, albeit at different rates of growth. For families with incomes above $150,000, the main reason for choosing to rent may be rising home prices.
The top 10 cities with the highest growth in high-income renters saw home price increases of more than 50% between 2015 and 2020.
- Seattle, Washington
- Miami, Florida
- portland oregon
- Nashville, Tennessee
- San Jose, California
- denver, colorado
- Indianapolis, Indiana
- Las Vegas, Nevada
- Phoenix, Arizona
Renters in these fast-growing cities can save money on repairs and maintenance, and have savings to buy when home prices and interest rates drop. Or the new American dream may include more than homeownership, as younger generations embrace close-knit communities living in luxury high-rise units in vibrant cities.
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