Cities across the United States have experienced an increase in renters. In fact, more U.S. households are renting than at any point in the past 50 years. Many mid-sized cities are close to joining the ranks of larger cities like New York, San Francisco, and LA where renters outnumber homeowners. One of the major contributors to the spike in renters is number of high-income households selecting to rent over own.
Growth of High-Income Renters
Overall, the total number of U.S. renters has grown 15% over the past decade. According to Apartment List, high-income renters are growing faster than any other income group. When examining data from 2008-2017, renters earning over $100,000 grew 48%, those earning between $50,000 and $100,000 grew 18%, and those earning less than $50,000 grew at only 8%.
Growth of High-Income Renters in Mid-Sized Cities
Typically, when people think of high-income rental markets, cities like LA, San Francisco, and New York come to mind. While these cities have a strong market for this demographic, they’re not experiencing the same level of growth as many mid-sized cities. Our hometown of Denver is leading the nation in the growth of high-income renters. Over the past decade, Denver has experienced 146% increase in the number of high-income renters. Austin, Oklahoma City, New Orleans, Memphis, Raleigh, and Minneapolis have all experienced an increase in over 100% as well.
Empty Nesters Choosing to Rent
According to Forbes, renter demographics are changing as well. “Households in the 55-and-over age group make up a quarter of all renters, and there is a strong demand among those people whose children have grown up and left the nest.” This age group is looking to live in the city, where they are within walking distance of restaurants and shopping. They’re also looking for amenities that will make their life easier, choosing to ditch the tedious work associated with maintaining a home.
Growing Barriers to Homeownership
Even high-income Americans are finding that it’s difficult to own a home. Apartment List reports that only 5% high-income millennials believe they will be able to own a home within the next year. This group reports difficulty of affording a down payment as the biggest obstacle in homeownership, as 69% have less than $10,000 saved for a down payment.
Spike in Multifamily Developments
Apartment construction has continued to thrive in cities across the United States. Forbes reports that multifamily construction surged 31%, with the pace of development of apartments and condos nationwide hitting 424,000 in August of this year. The rate of construction is simply keeping up with demand, as seen in the fact that rents have continued to rise even with the growth in development. These new developments are focused on offering incredible amenities, making renting even more appealing.