Own a house? Nah, say rich renters — and their numbers are growing

Not everyone thinks that real estate equity is a good investment.

That’s a quote from the folks at RentCafé, the apartment search website. Their new report, based on data from the U.S. Census Bureau, points to a startling demographic trend: a decade-long spike in the population of wealthy renters.

From 2005 to 2015, the national population of rich renters — defined as those with annual incomes of $150,000 and up — grew by 1.2 million from 551,000 to 1,750,000, an increase of well over 200 percent. That’s compared with an increase of about 80 percent for the number of homeowners in the same income bracket.

And guess which city tilts most steeply toward rich renters? San Francisco, where 25 percent of renters earn upwards of $150,000 a year. San Jose, with 15 percent, isn’t far behind.

You can read the report here.

It lists the 10 cities whose population of rich renters grew the most percentage-wise from 2014 to 2015. The list is led by Fort Worth where the numbers were up 77 percent. Yes, that’s in one year, says RentCafé. In order, the rest of the Top 10 are Portland, Memphis, Phoenix, Chicago, San Francisco, San Jose, Austin, Charlotte and Detroit.

Other highlights of the report:

  • With over 21,000 high-income renters, San Jose’s pool of rich renters grew by 32 percent from 2014 to 2015. The growth of the wealthy homeowner population was up less dramatically, by 12 percent.
  • San Francisco has the second largest population of rich renters: 57,000. The city now has more renter-occupied households with members in the $150,000-and-up category than owner-occupied households in the same bracket – despite the fact that San Franciscans pay an average monthly rent of $3,472. “What San Francisco has going for it,” says RentCafé, “is a solid job market, with high-paying IT and finance jobs occupied by young highly-skilled professionals — a recipe for the typical profile of an affluent renter.”
  • New York has the largest population of rich renters: 212,000, about 10 percent of its total renter population. In sheer numbers, that’s nearly quadruple the size of San Francisco’s cohort.

What it all adds up to is this: “There’s a growing number of people that know nothing of –  nor care about – the `30% of income on rent’ rule of thumb.”

Photo at top: A new crane rises up in downtown San Jose on May 18, 2015 for a seven-story apartment complex under construction at 51 N. 6th Street. (Karl Mondon/Bay Area News Group)

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