Why Even Millionaires Are Renting Right Now

Millionaire Renters

If you have put your plans to buy a home on ice because of the sky-high cost of homes, you’re not alone. In this market, even some of the highest-earning Americans are choosing to rent rather than buy.

Between 2018 and 2022, some 10.5% of Americans earning more than $750,000 per year chose to rent, per a Wall Street Journal analysis of data from the University of Minnesota. That’s the highest level since the mid-2000s, and up from 8.4% between 2013 to 2017. So what happened?

Why Buy?

Housing prices have hit fresh record highs in recent months, pricing many prospective buyers out of the market as America grapples with a structural shortage of homes. In short: There are a lot of people who want to buy and not enough homes for everyone.

But even households that could possibly afford a home at these soaring prices view the market unfavorably. The Federal Reserve’s fight against inflation brought on high interest rates, which pushed mortgage rates high, while other costs like property taxes and insurance premiums have climbed too. All this has made buying a home a less attractive investment for some.

On the flip side, there can be value in renting. While it doesn’t help to build wealth over time, renting provides flexibility. For anyone who spends less on rent than they would on a mortgage, it could also free up cash to invest.

To Rent or Buy?

Despite the tough housing market, homeownership remains a key strategy for building wealth and generational wealth.

But the decision to buy a home depends on many factors, including location, timing, and of course, your personal finances.

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