High-income renters are making a mark on the North Texas rental market, with Dallas-Fort Worth boasting the third highest number in the state and sitting 12th nationally.
That’s according to a new report from RentCafe, an apartment search website that helps renters find resident-rated rental communities.
What are high-income renters? They’re people who earn $150,000 a year or more and who rent homes rather than buy them. That choice may be fueled by home prices growing by 54%, prompting a whetted appetite for rentals.
Not surprisingly, RentCafe’s list of top millionaire renter hotspots was led by New York, San Francisco, and Los Angeles.
A new kind of tenant
RentCafe said there are 2.6 million high earners living in rentals in the U.S. and among them is a new kind of tenant—the millionaire renter.
According to RentCafe, the profile of the U.S. household is changing, and that homeownership isn’t for everybody, especially not for Millennials and Gen Zs.
Trending up in Dallas—and way up in nearby cities
While the number of high-income renters in Dallas rose by 74% and sits at 6% of the city’s total renters between 2015 and 2020—peaking at 17,257—the number of high-income renters rose even more dramatically in other North Texas cities.
Garland topped the list among North Texas cities with a 198% increase in high-income renters. McKinney was at 186%, Plano at 111%, Arlington, 103%, Frisco at 93%, Fort Worth at 79%, and Irving at 54%.
According to RentCafe, Garland has 909 high-income renters, McKinney has 2,748, Plano at 4,620, Arlington at 1,677, Frisco has 2,290, Fort Worth, 5,666, Dallas at 17,257, and Irving at 3,444.
Apartment living at its highest level in 50 years
Some 43 million families live in apartments, the highest level in half a century, and renting is popular even among high earners who are able to buy but prefer to rent their home instead, RentCafe said.
The website’s most recent analysis of IPUMS data shows that the number of renters with annual incomes of over $150,000 grew by 82% between 2015 and 2020. That’s faster than renters overall, who crept up by 3.2% during the same time frame.
IPUMS, or the Integrated Public Use Microdata Series, is the world’s largest individual-level population database. It consists of microdata samples from U.S. and international census records along with data from U.S. and international surveys.
High-income renters earning $150,000 or more saw rapid growth of 82% in five years. That’s the most significant increase among all income groups — followed by renter households with annual incomes between $100,000 and $150,000, RentCafe said in its report.
Middle-income renters grew at a slower pace, but even still they posted double-digit increases. RentCafe said that the only group to log a decline was households earning less than $50,000, which decreased by 11.2%.
That number could be explained by low-income renters moving back in with family members when the pandemic started, as well as households whose earnings grew and transitioned to higher income groups, RentCafe said in the report.
The connection of higher home prices
There appears to be a connection between higher home prices and the number of high-income people choosing to rent.
In nine of the 10 cities where the number of top-earning renters rose considerably, growth in home prices was higher than the national average (29%), RentCafe said.
The website reported that the number of renter households with incomes of more than $1 million nationwide reached a record high of 3,381 in 2020. That’s triple the number in 2015, when 1,068 millionaires were renting their homes in the U.S., according to the most recent data from IPUMS.
RentCafe also noted that while home prices might be an obstacle even for high-income renters, what stops some millionaires may be comfort and smart investing.
It said that homebuyers often realize that their new property needs more maintenance than expected. That could be paired with the flexibility of moving between cities to chase new career opportunities.
Some high earners, including some millionaires, prefer to funnel their cash into other types of assets that hold value, RentCafe said.
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