A growing number of millionaires are forgoing homeownership in big cities, either because of sky-high home prices or because they prefer to rent.
That’s according to a new report on the nation’s increasingly wealthy renters from RentCafe, a nationwide apartment-search website. An estimated 2.6 million high-earning households live in rentals, and some are a “new ritzy kind of tenant: the millionaire renter,” the RentCafe report said.
The number of people who make over $150,000 a year and rent grew by 82% from 2015 to 2020, according the report. In contrast, the number of renters nationwide over the same time period grew by 3.2%.
The data came from the Integrated Public Use Microdata Series, which incorporates census and survey data. IPUMS is part of an effort run by the University of Minnesota.
The “millionaire renter” seems like an “unlikely new kind of tenant,” the report said. The number of households that earn more than $1 million in income and rent reached 3,381 in 2020, three times as many as in 2015.
The growth in millionaire renters is partly due to high home prices. As of December 2022 , the median rent for an apartment in Manhattan was $4,048, according to Douglas Elliman. The median sales price was $1.1 million.
It could also be due to a desire to remain flexible, the report authors noted. Being bogged down in one place with a big monthly payment, or a property that needs a lot of maintenance, can drain cash and time.
Plus, other investments may be higher-yielding than a home, particularly with home prices sliding after a red-hot streak.
Where do millionaire renters live?
Most of these millionaire renters live on the East Coast and West Coast, the report said, specifically, in California, New York, and Washington, D.C.
New York has the highest number of millionaire renter households at 2,457. That’s three-quarters of the nation’s total.
San Francisco saw a big surge in millionaire renter households between 2015 and 2020, the report added, as seen in the table below.
“California is a millionaire magnet,” the report added, “as the number of seven-digit income renters also rose significantly in Los Angeles, by 361%, to 143 in 2020.”
But other cities are seeing the flow of high-income renters come in: Seattle saw the biggest jump in high-income renter households, Rent Cafe said, followed by Miami, and Portland.
The presence and employment needs of tech giants like Amazon
are pulling the wealthy towards Seattle, the report said.
Who is the average millionaire renter?
The average millionaire renter is not too young, works as a manager, and rents a three-bedroom apartment, according to RentCafe.
The largest share (28%) of millionaire renters are millennials; Gen X make up 23% of millionaire renter households, according to RentCafe.
The most popular job held by millionaire renters? Management positions. That’s followed by sales agents who work in securities, commodities, and financial services, as well as chief executives and legislators.
The average size of a millionaire household varies, the report said, but a three-bedroom is the national average.
Millionaire renters in D.C. have the biggest homes on average (five bedrooms), followed by Jersey City (four). Renters in Los Angeles, SF, and New York have on average three bedrooms.
Where people are moving — not just the millionaires
While certain cities are hubs for millionaire renters, other data on where people are moving show that overall, some Americans have had enough of living in big, expensive cities and are opting for cheaper, sunnier destinations.
In 2022, Florida saw the most number of newcomers, followed by Texas, and North and South Carolina. These states had the most net domestic migration gains in 2022, according to a separate report by the National Realtors Association (NAR).
The NAR used U.S. Census Bureau data, as well as United States Postal Service change-of-address data, to come up with the findings.
California, New York, and Illinois lost the most number of people, according to the NAR.
“Although more people are returning to these areas as employers demand a return to the office, outbound still outpace inbound moves in these large areas,” the NAR said. “While affordability hit record lows in 2022, it is the primary reason that people continue to relocate from these big city centers to less dense and more affordable areas.”
Between 2019 and 2022, the cities that saw the biggest inflow of people included Miami, Fla., Scranton, Pa., and Minneapolis, Minn.
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