Watch: What the increase in millionaire renters means

Owning a home may be the hallmark of the American Dream, but not necessarily so for millionaires, according to The Real Deal’s Hiten Samntani in the latest edition of Resi Rundown.

High mortgage rates, soaring home prices and the flexibility that comes with not laying down roots all play into wealthy millennials and members of generations X and Z renting their homes. 

In 2020, there were close to 2,500 millionaire rental households in New York City, according to a study by RentCafe. And there were nearly 3,400 millionaire households nationwide in 2020, a record high and three times as many as there were five years prior. Most other millionaire renters were in coastal cities such as Washington, D.C., and San Francisco.

The number of millionaire rental households in San Francisco rose 1,629 percent, from 17 in 2015 to 294 in 2020, the study says. Los Angeles also saw a significant increase, 361 percent, to 143 in 2020. D.C. had 121 millionaire renters.

“Often homebuyers are struck with the realization that their new property needs more maintenance than expected,” the study says. “Couple this with the flexibility of moving between cities to pursue new career opportunities and you can see why even the most affluent sometimes choose to rent their home. Additionally, some high-earners, including some millionaires, prefer to funnel their cash into other types of assets that hold value.”

The fallout may be that developers focus on luxury rental projects rather than condominiums.