The narrative about multifamily is that residents are divided into two categories:
- Renters by need who rent because of financial constraints
- Renters by choice who choose to rent because of lifestyle preferences
According to a recent RentCafe report, one growing demographic in the renter-by-choice category is millionaires. The write-up explained that the number of millionaire rentals has tripled since 2019, “outpacing their homeowning counterparts in one of real estate’s most unexpected trends.” By the numbers, millionaire renters grew from 4,500 (2019) to 13,700 (2023).
The Whys
“The rise of remote work, high home prices and interest rates have made renting more attractive, even for millionaires,” report author Adina Dragos told Connect CRE. “Renting offers this demographic flexibility, liquidity and lifestyle benefits.”
Renting also allows high-earners more capital flexibility, “allowing them to invest in stocks or businesses, instead of tying up money in real estate,” Dragos said. Additionally, renting versus owning protects millionaires from up-and-down housing markets and unpredictable mortgage costs.
Then there is the flexibility. “It supports easy moves when jobs or lifestyles change,” Dragos explained. “Plus, renting lets wealthy individuals explore different neighborhoods without long-term commitments before deciding to buy.”
The Wheres
The report said that the southern metros are the fastest-growing spots for millionaire renters, but the nation’s gateway cities are also attracting their fair share of high-income residents.
Dragos said that high-earning residents tend to gravitate toward two types of housing: Apartment buildings with 50 or more units and detached single-family homes.
“Nearly 40% of these individuals choose to live in large multifamily buildings, likely drawn by luxury amenities, prime urban locations, concierge services, and security,” she said. Meanwhile, about 29% of this renter class favors the privacy, space and suburban lifestyle offered by single-family detached homes.
Either preference suggests that “millionaire renters value comfort, flexibility and convenience, whether through upscale urban living or private, family-friendly homes, while maintaining the freedom that comes with renting rather than owning,” Dragos noted.
The Takeaway
Dragos said the increase in the number of millionaire renters is part of a wider trend, that of individuals with annual incomes of $150,000 or higher, delaying homeownership. “Millionaire renters—and owners—are reshaping the luxury housing market, especially in Southern regions, including cities like Houston, Dallas, Charleston and Atlanta,” she added.
As a result, Dragos suggested that developers and investors consider building and owning premium rental communities with flexible leases, high-end amenities and smart technologies. “Staying aware of economic trends, migration patterns, and evolving preferences will help investors succeed in this particular market,” she added.
An earlier version of this article is on ApartmentBuildings.com.
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