Wealthy Renters Are Flocking to Major US Metros

More wealthy renters are moving to major US metros, driven by rising home prices and mortgage rates, according to a Redfin report.

Flocking to Major Metros

Wealthy renters are capturing a larger portion of the rental inventory in some of the largest metro areas across the US, per GlobeSt.

The study shows 35 of the 50 most populous US metros have seen their share of wealthy renters grow in recent years, particularly as home prices continue to rise.

As Redfin senior economist Elijah de la Campa explains, many affluent Americans are choosing to lease instead of buy. “The cost of buying a home has jumped significantly more than the cost of renting one in recent years,” de la Campa explained.

With mortgage rates hovering near 7%, renting frees up more cash for other potentially lucrative investments, such as stocks or bonds, making renting a more appealing option for the wealthy.

Top Cities For Wealthy Renters

The wealthy renter uptrend is noticeable in cities like Raleigh, North Carolina, where 7.7% of renters are considered wealthy—up from 4.8% in 2019.

Orlando has also seen its share of wealthy renters rise, with 10.8% of renters now classified as wealthy compared to 8.5% five years ago.

Other metros, including Buffalo, Tampa, and San Diego, also saw a net influx of wealthy renters, ranging from 1.4% to 1.3% higher than in 2019.

Of course, the highest concentrations of wealthy renters are still found in tech-heavy and high-cost markets like San Jose (11%), Orlando (10.8%), and San Francisco (10.4%).

On the other end of the spectrum, metros like Oklahoma City, Cincinnati, and Cleveland reported the lowest percentage of wealthy renters, with figures under 5%.

Rising Home Prices

In many of these top metros, the typical wealthy renter earns more than enough to afford a median-priced home. Cities in the Sun Belt, which saw dramatic home price growth during the pandemic, are at the forefront.

For instance, the median home sale price in Tampa has soared 67.4% since 2019, with the income required to afford a typical home rising by 63.1%.

Meanwhile, median rents in Tampa shot up 51.6% during the same period, indicating a smaller affordability gap between renting and buying.

Lack of Affordable Rentals

On a national scale, the income required to afford a median-priced home has risen by 36.9% over the past six years, while rents have climbed 28.1%.

The study also found that the share of wealthy renters in any given US metro goes up about half a percentage point for every 10% drop in homebuying affordability.