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Millennials Drive the Bus in Lifestyle Renting
The number of higher-income Millennials who are renting instead of buying a home is on the rise, says RentCafe. In fact, this age cohort is behind the recent boom in lifestyle renting. They saw a 20% rise in rental applications, more than any other buying-age cohort. Their increased activity on this front drove this year’s 39% all-time high of rental applications coming from individuals earning more than $50,000,
Lifestyle renters have above-average incomes that normally would allow them to buy in a less competitive market. Renting with a bigger budget allows them to live in amenity-rich, higher-quality apartments.
While this trend is most evident among Millennials, the homebuying market frenzy is deterring other generations, as well, RentCafe says. For example, Millennials, Generation X and Baby Boomers all saw a rise in applications from higher-earning renters in 2021. Specifically, the share of Millennial rental applicants who earn more than $50,000 was 43%, up from 36% in 2020, while Gen Xers in the same income range represented 55% of rental applications within their generation, up from 49% the year prior.
A 2020 RentCafe survey revealed that the pandemic hampered the plans of 43% of renters who were about to take the leap toward homeownership last year. Along with soaring home prices—the latest S&P CoreLogic Case-Shiller Index reports double-digit annual growth yet again, albeit at a slowing rate–experts believe that rising inflation and interest rates make it increasingly difficult to save money for a down payment.
“Buying a home is out of the question for them, while lifestyle renting suits their financial condition much more,” RentCafe quotes Dan Beaulieu, founder of Burlington House Buyers.
Up until 2020, the share of higher-earning Millennial rental applicants was rising slowly. The current year, though, marked a significant spike. Added to which, Millennials who applied for a rental this year don’t have the same profile as the ones who moved last year: now, they’re $4,300 wealthier on average.
The growing percentage of lifestyle renters is due partly to many Millennials realizing that the benefits of homeownership don’t outweigh the difficult path to achieve it. RentCafe quotes Noah Echols, VP of marketing at Atlanta-based investment firm Carroll, as saying, “Housing prices have been rising for years, making it more difficult for renters to transition into homeownership. Student loan debt has also increased, making it difficult for young people to save for a down payment.”
Accordingly, with the number of high-earning renters rising, the demand for high-end apartments is also on the rise. Forty-two percent of Millennials applied to live in upscale apartment buildings in 2021, compared to 38% five years ago.
- ◦Lease
- ◦Economy
