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May 2019

Seattle leads trend of high-income Americans opting to rent instead of buy

May 6, 2019

Seattle outgained 19 other cities in the growth of high-income Americans opting to rent instead of buying a home, according to an analysis by RENT Café, a nationwide internet listing service. This "new breed" of renter is challenging the home owner market, the service suggests.

According to its analysis, which covered the years 2007 through 2017, Seattle experienced the highest increase in wealthy renters in the country, jumping from 2,900 in 2017 to 21,300 in 2017. That amounts to a renter increase of 7.4 times for the "wealthy renters" category, far surpassing the national figure of a 175 percent increase. Wealthy renters were defined as households earning more than $150,000.

Rents also rose dramatically in Seattle during the same period, so some analysts suggest some of the growth in wealthy renters may be because they could better handle the increases.

During the same timeframe homeowners in Seattle doubled, growing from 31,400 to 63,300.

U.S. Census data indicates the annual increase in the number of high-income renter-occupied households has been consistently greater than owner-occupied households. The numbers of those rich enough to own, yet who still prefer to rent grew by 175 percent, substantially larger than the decade-long increase of 67 percent in homeowners within the same income bracket.

RENT Café attributes the affluents' growing preference for renting to various factors, including greater flexibility and access to city centers or arts districts as well as closer proximity to work.

Shifts in apartment production are also cited as a factor. In Seattle, which ranks 11th in the country for delivering new apartments, production has been slowing, but outside the city it is surging. As an example, Seattle produced 11 percent fewer apartments in 2018 than 2017, while Redmond's production jumped about 230 percent during that same time.

Asked about her choice to rent instead of buy, one tech worker who earns more $200,000 said renting offers higher flexibility. "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," she stated. Adding, "I'd rather pay inflated rent on temporary term than inflated mortgage on long term."

Seattle isn't the only city where wealthy renters are outpacing homeowners. The list also includes Austin; Baltimore; Charlotte, North Carolina; Chicago; Dallas; Indianapolis; Philadelphia; Portland; San Francisco; San Jose; Austin; and Dallas.