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- Average monthly mortgage payments reached record highs in 2023 with the Fed's interest rate hike.
- Renting is an increasingly attractive option even for high-income earners.
- More and more households with $1 million-plus incomes are renting, according to a Wall Street Journal report.
An increasing number of high-income households are opting to rent, not buy.
In 2022, there were 4,453 renter households with an income of more than $1 million, The Wall Street Journal reported based on US Census data compiled by the IPUMS. That's about four times more than in 2017, when 956 households with an income of more than $1 million rented, according to the report.
Census data also showed that the number of renters who earn more than $200,000 a year is four times higher than in 2010, according to the Journal.
As affordable housing remained scarce and mortgage rates climbed in 2023, renting has become an increasingly attractive option.
The Federal Reserve's interest-rate hikes throughout this year to combat inflation pushed rates on a 30-year fixed mortgage to 8% in October for the first time since 2000.
That has helped make the average monthly mortgage on a new home about 52% higher than the average rent on an apartment — an all-time high since at least 1996.
Mortgage rates have since simmered down in the past few months, while the Fed expects to cut rates in 2024. But even so, public opinion on the benefits of buying versus renting has changed in the past several years.
A 2018 study by Value Insured showed that 61% of millennials believed buying a house is more beneficial than renting, a 22% decrease since 2016.
This change in priorities can be seen throughout the housing market, with, for example, fewer young people opting for starter homes or small, single-family homes and instead choosing to rent.
"The new math behind the decision to rent or buy has been well documented, but this isn't a temporary shift that'll reverse once interest rates come back to earth," Zumper CEO Anthemos Georgiades recently said in a statement. "Renting a home is now widely considered a viable and appealing option for all types of Americans."