The population of high-income Americans who are choosing to rent has dramatically shot up over the past 10 years, and Seattle leads the pack.
Seattle is among 20 cities that have experienced a phenomenon of high-income residents opting to rent instead of buying a home between 2007 and 2017. In fact, Seattle experienced the highest increase in wealthy renters in the nation — households earning more than $150,000.
“I’d rather pay inflated rent on temporary term than inflated mortgage on long term,” said Jane (not her real name). “Housing as an investment model that was popular in our parents’ day is making less sense these days with more open access to the stock market and other investment options emerging. It takes longer to liquidize money in a property than money in, say, stock or crypto.”
Jane works in the tech industry and earns more than $200,000 annually. From her perspective, renting offers higher flexibility. She can leave the city if she wants, and can easily switch her investment strategy.
According to an analysis by RentCafe, this is a “relatively new breed of renter” that is challenging the home ownership market.
- There were 2,900 high-income renters in Seattle in 2007. In 2017, there were 21,300.
- That’s a renter increase of 7.4 times.
- Homeowners in Seattle doubled between 2007-2017, going from 31,400 to 63,300.
- Nationally there was a 175 percent increase in renters earning $150,000; an 111 percent increase $100,000-$150,000; 66 percent increase in $75,000 – $100,000; 32 percent increase in $50,000-$75,000.
According to RentCafe:
The most recent U.S. Census data tells us that the annual increase in the number of high-income renter-occupied households – defined here as those earning $150,000 or more – has been consistently faster than owner-occupied households. As a matter of fact, from 2007 to 2017, the numbers of those rich enough to own, yet who still prefer to rent grew by 175 percent. That’s compared to a decade-long increase of 67 percent in homeowners within the same income bracket.
RentCafe speculates that many renters, who can afford it, choose to live in the city for greater flexibility and access to city centers or arts districts. Living closer to work is also a benefit. For Jane, she says the renting option keeps her more in touch with local artists. She prefers artist co-ops.
“Most artist live/work spaces are only for rent and not for sale because co-ops like this in the Seattle area are likely formed decades before,” she said. “So, to stay better connected in my community, renting is the better option.”
Other cities where wealthy renters are outpacing homeowners are: Charlotte, North Carolina; Baltimore; San Jose; Portland, Indianapolis; Philadelphia; San Francisco; Chicago; Austin; and Dallas. While Houston has more renters than homeowners, that city’s share of people earning more than $150,000 and renting is far less than Seattle’s.
Rent in Seattle
The data RentCafe considered was from 2007 through 2017. Rent during this time dramatically increased in Seattle, so it could be assumed that wealthy renters are more plentiful because they could better handle the increases.
Other recent factors could add up to a shift in the Seattle rental market, however.
Seattle apartment production has been decelerating. But apartment construction outside the city is on the rise, such as in Redmond. Seattle ranks 11th in the country when it comes to delivering new apartments, with a 3.5 percent increase between 2017 and 2018 (Seattle actually produced 11 percent fewer apartments in 2018 than 2017). Redmond, however, produced about 230 percent more apartments during that same time.
Meanwhile, KIRO 7 has reported that the condo market is on the rise as rents settle out. Rental concessions are also down in Seattle — deals and perks that landlords offer to attract residents. Other cities are seeing an increase in these offerings.
Landlords are also reportedly ditching Seattle with 40 percent of the city’s landlords selling their properties. This is supposedly in response to the city’s strict landlord regulations.