For those at the top of the income bracket, the increasing cost of rent may be just the price of living in a desirable downtown neighborhood. But as more and more of the wealthiest Americans turn to renting instead of owning, due in large part to the skyrocketing price of owning urban property, their decisions are collectively altering the rental market, and potentially raising rent, for the rest of us.
A new post at RentCafe looks at data from the Census Bureau’s American Community Survey and charts just how many top earners have entered the rental market. From 2005 to 2015, the number of renter households making more than $150,000 a year increased by 217 percent, jumping from roughly 551,000 to 1,750,000. This demographic is also the fastest-rising sector of the rental population. Those making $100,000 to $150,000 jumped by 145 percent over the same period, and lower income brackets showed progressively less growth.
That sizable jump has given landlords and developers an incentive to develop high-end rental properties, especially in booming real estate markets such as Fort Worth, Texas, and Portland, Oregon, which have seen massive influxes of wealthy renters (77 percent and 71 percent increases in that demo, respectively). These numbers make it plain why developers often concentrate on lucrative, high-end apartments, expanding the availability of pricey rentals while ignoring the need for the construction of more affordable units.
San Francisco, not surprisingly, exemplifies the trend. Last year, of households in the city making $150,000 a year or more, 56,591 were renting and 54,445 owned homes, a very atypical split. In the United States as a whole, there are normally seven times more owner than rental households in top income categories.