Millionaire Renters Triple, While High-Income Renters Earning $150,000 or More Reach 2.6 Million

The American household is changing as homeownership is not a priority for everyone, especially not for Millennials and Gen Zs. With 43 million families living in apartments, the highest level in half a century, renting is popular even among high-earners who are able to buy but prefer to rent their home instead. In fact, our 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, faster than renters overall, who inched up by 3.2% during the same time frame. There are now 2.6 million high-earners living in rentals in the U.S. and among them is a new ritzy kind of tenant: the millionaire renter.

High-income renters earning $150,000 or more saw rapid growth of 82% in five years — the most significant increase among all income groups — followed by renter households with annual incomes between $100,000 and $150,000. At the same time, middle-income renters grew at a slower pace, but still posted double-digit increases. The only segment to register a drop was that of households earning less than $50,000, which decreased by 11.2%. This is explained by low-income renters moving in with family members when the pandemic started, as well as households whose earnings grew and transitioned to higher income groups.

What makes those who can afford to buy turn to renting? Part of the answer may be found in high home prices, which made homeownership less attractive, especially for those well-heeled residents in pricey locations. And this becomes even more obvious when comparing home prices to renter income in the cities with the highest increases in high-income renters: In nine of the 10 cities where the number of top-earning renters leapfrogged considerably, growth in home prices was higher than the national average (29%).

An even more interesting phenomenon of the past few years is the rise of an unlikely new kind of tenant — the millionaire renter. The number of renter households with incomes of more than $1 million reached a record high of 3,381 in 2020 — three times as many as there were in 2015, when 1,068 millionaires were renting their homes in the U.S., according to the most recent data from IPUMS.

While home prices could be considered an obstacle even for high-income renters, what stops some millionaires from stepping on the homeownership ladder? Well, it might be an issue of comfort and smart investing. Often homebuyers are struck with the realization that their new property needs more maintenance than expected. Couple this with the flexibility of moving between cities to pursue new career opportunities and you can see why even the most affluent sometimes choose to rent their home. Additionally, some high-earners, including some millionaires, prefer to funnel their cash into other types of assets that hold value.

If you live in a fancy New York or San Francisco neighborhood, the renter next door might be a… millionaire!

So, what does this new breed of renter look like?

According to a survey from Charles Schwab, Americans consider that an average net worth of 1.1 million represents being “financially comfortable”. And it seems that being financially comfortable is a Millennial trait, with this demographic making up a majority (28%) of millionaire renters. For many Millennials of homebuying age and with above-average incomes, lifestyle renting is a better choice than owning. This mindset is mirrored among millionaire Millennials, too, who, unlike their Baby Boomer parents, decide to rent despite having the financial resources to own.

Gen X follows closely behind, making up 23% of millionaire renter homes. As the first generation that redefined and broke away from the American dream of homeownership, Gen Xers initially turned to renting due to the strain brought on by the 2008 housing crisis. Today, they’re following the same lifestyle renting trends as their younger counterparts.

So, what do millionaire renters do for a living? Data shows that the most popular jobs among millionaire renters are in management positions (1,653); followed by securities, commodities and financial services sales agents (519); chief executives and legislators (468); software developers (459); and lawyers, judges, magistrates and other judicial workers (421).

According to IPUMS data, the rental home size of millionaire households varies across the U.S., with three-bedroom homes being the national average. Millionaire renters in Washington, D.C. have the largest homes, on average, five bedrooms, followed by Jersey City, NJ with four. Alternatively, in cities like Los Angeles, San Francisco and New York, the average home size is three bedrooms.

Here are a few examples of luxury apartment buildings in the nation's high-income renter hotspots:

Millionaire households skyrocket; San Francisco, Los Angeles & D.C. register the biggest spike

Wealthy renters live mainly on the coasts, specifically in California, New York and Washington, D.C. San Francisco, CA held second place in the number of millionaire renter households, but had the biggest spike between 2015 and 2020. The golden city’s rental homes inhabited by millionaires multiplied a whopping 17 times (1,629%), growing from 17 households in 2015 to a total of 294 in 2020. California is a millionaire magnet, as the number of seven-digit income renters also rose significantly in Los Angeles, by 361%, to 143 in 2020. Washington, D.C. has 121 renters who earn over one million dollars per year.

Clearly, major urban areas are the millionaire renter hotspots, with New York leading the pack with the highest number. 2,457 renter households earn over a million dollars per year in the Big Apple, three-quarters of the national total.

Seattle, Miami & Portland boast the largest increase in high-income renters in the U.S.

High-income renters — those who earn at least $150,000 per year — are growing across the nation. According to U.S. Census data, in 14 cities across the U.S., high-income tenants more than doubled in numbers in the last five years. Specifically, the 10 cities that saw the most significant increases in the number of rich renters are scattered mostly throughout the West and the South, with Seattle, WA taking the lead as the fastest-growing high-income renter hotspot.

To that end, high-income renters nearly tripled in Seattle (169%) compared to 2015, making it the nation’s fastest-growing area for affluent renters. As a matter of fact, 17% of renter households in Emerald City have an income of over $150,000. Here, their number increased from 12,305 to 33,111 in just five years — thanks, in part, to a healthy and diverse job market. Technology titans, such as Amazon and Microsoft, are fueling the employment needs of Seattleites, along with a booming biotech industry. Despite this, not even well-off Seattleites could keep pace with the growth of home prices in the last 5 years: 58%.

A similar spike of 166% in wealthy renters pushes Miami, FL into second place. Granted, homeownership in Miami-Dade County has been dropping consistently even before the pandemic. So, it comes as no surprise that 2020 saw an influx of rich renters, reaching a high of 8,653 households (compared to 3,258 just five years prior).

In third place, Portland, OR registered a 148% rise in the number of high-earning renters, reaching 9,503 as of 2020. Despite salary increases rivaling home price increases, some well-off Portlanders still choose to rent.

New York, Los Angeles & San Francisco are leading hotspots for high-income renters

When looking at the total number of high-income renter households, New York is the "it" place for renters that earn over $150,000 per year. The Big Apple had a total of 296,594 such households in 2020, representing a share of 11% of the national total. On the opposite coast, Los Angeles lags behind New York with 82,655 high-income renter households, despite registering considerable growth in the last five years. Two other California cities are in the top five: San Francisco and San Jose with 80,020 households and 34,585 respectively, while Chicago, IL takes fourth place with 50,999.

Overall, incomes on the West Coast are higher than elsewhere in the nation. In particular, San Francisco, CA, has the highest percentage of high-income households who rent their home, with 36% registered in 2020, compared to 19% in 2015. The Bay Area city’s high median income and high-paying jobs are the main explanation behind San Francisco’s 86% growth in rich renters in this timeframe. In a similar situation are San Jose, CA, and Seattle, WA, with high-income rental homes representing 25% and 17%, respectively, of the total renter households.

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Methodology  

• RentCafe.com is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States. 
• For this study, we looked at the number of millionaire renters households between 2015 and 2020 5-year estimates, across 100 U.S. cities available from IPUMS, and the number of high-income renter households (having an annual income greater than $150,000) from U.S. Census data. 
• We consider "millionaire renters" individuals from households that have a total household annual income greater than $1,000,000 and rent an apartment or a house. 
• In calculating the average age of millionaire renters, we only considered working age (15+). In creating the tops, we considered the cities having at least 20 households or at least 100 individuals living in the millionaire households to create a relevant sample.
• Millionaire renters data was extracted from the IPUMS Survey Documentation and Analysis (SDA) tool for 2020 and 2015, 5-year estimates (2015 and 2020) using the following variables: Age, Occupation, Number of bedrooms, Number of cars, Marital Status, Average Gross Rent, and City. 
• Age, Occupation, and Population frequency distribution in generations estimates were generated for individuals. The number of millionaire renter households and the average number of bedrooms were estimated for households.
• IPUMS means Integrated Public Use Microdata Series and provides census and survey data from around the world integrated across time and space. IPUMS is a part of the Institute for Social Research and Data Innovation at the University of Minnesota. 
• Steven Ruggles, Sarah Flood, Ronald Goeken, Josiah Grover, Erin Meyer, Jose Pacas and Matthew Sobek. IPUMS USA: Version 10.0 [dataset]. Minneapolis, MN: IPUMS, 2020. https://doi.org/10.18128/D010.V10.0
• High-income renters households were extracted from U.S. Census ACS 2020 and 2015, 5-year estimates. Renter households having an annual income greater than $150,000 and cities with more than 100,000 households were considered. Home values increase between 2020 and 2015 were extracted from U.S. Census ACS 5-year estimates (Median Value for Owner Occupied Units).