Renting was once the norm for people saving for a down payment and homeownership. But even the wealthiest Americans are becoming “perpetual renters.”
According to a report in the Wall Street Journal, millionaire renters are a rising faction in the market. Although the market share among tenants is relatively modest, there are enough of them that developers and designers are starting to cater to their whims.
From 2018 to 2022, the percentage of renters with an annual income of $750,000 rose to 10.5%, according to data from the University of Minnesota IPUMS. This is the highest level for wealthy renters since the survey began tracking the share in the mid-2000s.
That’s not the only historical notch for wealthy renters. According to the Federal Reserve’s Consumer Finance Survey, the share of renters in households in the top 5% of households by net worth will jump to 3.7% in 2022. This is the highest amount since the 1990s.
Although the data is not broken down by state, rental and ownership challenges occur similarly across the country. According to Bankrate, there is not a single market in the top 50 domestic markets where buying is cheaper than renting.
Wealthier Americans face the same affordability challenges, albeit to a much lesser degree. As mortgage rates soared and prices rose with them, those with means chose to rent rather than house and put their money into stocks and investments. Rising costs of home ownership, such as property taxes and insurance premiums, are also scaring prospective buyers.
Convenience and flexibility also appeal to a growing class of affluent renters.
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As wealthy Americans increasingly choose to rent rather than buy, even temporarily, developers have an obligation to adapt to changing winds. Post Brothers, a Philadelphia-based company, is building properties with larger floor plans and playrooms to cater to wealthy tenants who rent for long periods.
— Holden Walter Warner
