Homeownership has become completely unaffordable.
However, it’s not just a problem for the middle and lower class anymore. Even the wealthy are balking at the limited selection, high mortgage rates, and even higher prices.
Even though some people can afford to pay upfront for a house, it doesn’t mean they want to, as that money could be better spent in the stock market and other investments.
And it’s not just the cost of homes that has increased, but the associated insurance costs and property taxes.
As they wait for the right house to become available at the right price, some people with enough money to buy a home are choosing to rent, with the number of wealthy renters nearly doubling in the last 15 years.
The Wall Street Journal reports on the rise of wealthy renters. Here’s the start of the story:
George Goognin, the millionaire founder of a fintech startup, moved to the U.S. two years ago from Russia. He planned to rent while he searched for a place to buy in Silicon Valley. But after a monthslong househunt, he saw nothing he liked. So he moved on.
He looked for a home to buy in Miami, then in New York. At each stop, he was frustrated by what he considered a lack of suitable homes for sale.
“In terms of price for value, the supply is close to zero,” Goognin said. Instead, he is renting a three-bedroom apartment in a luxury Manhattan high-rise for about $19,000 a month.
Goognin is a part of an emerging group of unlikely renters: millionaires. While still relatively small in number, millionaire renters in the U.S. are on the rise, a reflection of how the calculus around homeownership has changed for even the wealthiest in the U.S.
Between 2018 and 2022, the share of households with annual incomes of more than $750,000 that rented rose to 10.5%, according to census data from IPUMS at the University of Minnesota analyzed by The Wall Street Journal, the highest level since the survey began in the mid-2000s. It was 8.4% in the previous five-year period.