Wealthy renters are accumulating a larger portion of rental inventory in 35 of the 50 most populous metropolitan areas, according to a Redfin report. The trend is particularly pronounced in Raleigh, North Carolina, where 7.7% of renters are considered wealthy, up from 4.8% in 2019.
Orlando also has a growing share of its rental market occupied by wealthy renters, with 10.8% of its rental base considered wealthy, up from 8.5% in 2019. In Buffalo, 6.8% of renters fit this mold, up from 4.6%, while the share in Tampa was 9.4%, up from 7.9%, and in San Diego, those tenants made up 9.3% of the market, up from 8%.
“Many affluent Americans are choosing leases over mortgages because the cost of buying a home has jumped significantly more than the cost of renting one in recent years,” said Redfin senior economist Elijah de la Campa. “With mortgage rates near 7%, renting frees up cash for other investments that may be more lucrative than real estate.”
In each of the top five metros, the typical rich renter earns more than they would need to afford the median-priced home for sale. Notably, four of these five metros are in the Sun Belt, where home prices skyrocketed during the pandemic.
In Tampa, for example, the median home sale price is 67.4% higher than it was in 2019, and the income needed to afford a typical home in the city is up 63.1%. That's the biggest increase in both metrics among the metros analyzed. Meanwhile, rents in Tampa are up 51.6% over the same period.
Across the country, the income needed to afford a median-priced home is up 36.9% during the past six years, and rents are up 28.1%. On average, the share of wealthy renters in a metro rose by half a percentage point for every 10% drop in homebuying affordability, the study found.
The markets with the highest share of affluent renters are San Jose (11%), Orlando (10.8%), San Francisco (10.4%), New York (10.3%) and Seattle (9.9%). But of course, they didn't experience growth in that category quite like an area like Raleigh. On the other end, Oklahoma City was home to the lowest percentage of affluent renters, with just 4.7% earning the top 20% of local incomes. Other markets around this category are Cincinnati, Hartford, Cleveland and Providence.