Renter households earning more than $1 million tripled in the last five years, from 1,068 in 2015 to a record high of 3,381 now, according to a new study from RentCafe. After millionaires, high-income renters earning $150,000 or more saw rapid growth of 82% in five years.
Rentcafe’s latest study examined renter annual incomes to see changes in the rental rates between income groups. The report found that renters earning between $100,000 and $150,000 came in third for growth, and middle-income renters grew at a slower pace in fourth, but still posted double-digit increases. The only segment to register a drop was that of households earning less than $50,000, which decreased by 11.2%.
The report also found that 28.4% of millionaire renters were millennials, 22.6% were Gen Xers, 13.5% were baby boomers, 8.2% were Gen Zers, 5.9% were the silent generation. As for where millionaire renters are located, the wealthiest renters live mainly on the coasts, and major urban areas are the millionaire renter hotspots.
- New York leads the pack with the highest number—2,457 renter households earn over a million dollars per year, up from 908 in 2015 and a growth of 171%.
- San Francisco, aka the golden city, comes in second and had the biggest spike between 2015 and 2020, multiplying 17 times (1,629%) and growing from 17 households in 2015 to a total of 294 in 2020.
- Third is Los Angeles, which grew by 361%, from 31 in millionaire renter households 2015 to 143 in 2020.
- Washington, D.C. is fourth with 121 renters who earn over $1 million, up from 41 renter households in 2015 to 121 in 2020 and a growth of 195%.
- Lastly in fifth is Jersey City which grew from 0 renter households earning over $1 million in 2015 to 104 in 2020.
- As for high income renters earning over $150.000, they’re mostly located throughout the West and the South. Numbers nearly tripled in Seattle (169%) compared to 2015 (from 12,305 to 33,111), making it the nation’s fastest-growing area for affluent renters.
- A similar spike of 166% in wealthy renters pushes Miami into second place, from 3,258 households in 2015 to 8,653 in 2020.
- Third is Portland which grew by 148%, from 3,828 wealthy renter households in 2015 to 9,503 in 2020.
- Nashville falls in fourth with 5,935 wealthy renter households in 2020, a growth of 140% from the 2,476 in 2015.
- Lastly in fifth is Austin with a growth of 130%, growing from 7,753 wealthy renter households in 2015 to 17,838 in 2020.
“What makes those who can afford to buy turn to renting? Part of the answer may be found in high home prices, which made homeownership less attractive, especially for those well-heeled residents in pricey locations. And 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%),” said Andrea Neculae, creative writer for RentCafe and author of the report. “An even more interesting phenomenon of the past few years is the rise of an unlikely new kind of tenant — the millionaire renter.”
Continued Neculae, “While home prices could be considered an obstacle even for high-income renters, what stops some millionaires from stepping on the homeownership ladder? Well, it might be an issue of comfort and smart investing. Often homebuyers are struck with the realization that their new property needs more maintenance than expected. Couple this with the flexibility of moving between cities to pursue new career opportunities and you can see why even the most affluent sometimes choose to rent their home. Additionally, some high-earners, including some millionaires, prefer to funnel their cash into other types of assets that hold value.”
For the full report, click here.