The American Dream has always been owning that nice house in the suburbs with the white picket fence. But a new phenomenon of “rich” renters may change that as more of those earning six-figure incomes in Denver choose to stick with renting rather than buy. According to the Denver Post, Denver had one of the largest increase of households who rented and made $100K or more per year.
Why Not Buy?
It’s often thought that those that make those 6 figures choose to buy more often than rent. However, in Denver, it seems that the opposite is true. In fact, the number of renters who brought in that high of an annual income and chose to rent increased 146% between 2008 and 2017, according to the same article.
So why are “rich” renters choosing not to buy? The number one reason comes down to flexibility. It’s a well-known fact that Millennials prefer to have the option to up and move rather than be tied down. Renting allows a flexibility that owning does not.
It’s All About the Action and the Amenities
Another reason many high earners have chosen to rent instead of buy is that these “rich” renters want to be near the heart of downtown. The stock of condos or homes to buy in that area are vastly out-numbered by those available to rent, especially with the boom in new luxury apartments. And it’s not just Millennials that are moving into these city-center rentals. Many Baby-boomers who don’t want to have to maintain a yard or deal with home maintenance on their own have chosen to rent rather than buy. Not too mention all of the luxury amenities offered by newer apartment rentals that many units for sale just don’t have.
Debt, Debt, Debt
Another factor to consider in why these high earners choose to rent instead of buy is student loan debt. While these “rich” renters are making 6 figures, many of them are also saddles with a hefty monthly payment towards their student loans. This means that money they could be using to save for a down payment is going towards paying of debt instead.
But what about those “rich” renters who have started a family and don’t want to live downtown? Why don’t they buy? The problem many of these renters face is the number of starter homes available to buy. So many single-family homes have been purchased by investors instead to use as rentals, and most developers have focused their efforts on multi-family units or high-end single-family homes, making it difficult for these “rich” renters to find a home to buy. This leads many renters looking for a single-family home to rent one instead of buy.
The renting lifestyle appeals to many. Renting offers flexibility and can save time and money for those who would rather not pay to maintain their own home. So with the preference shifting from buying to renting, it will be interesting to see how the American Dream changes as a result.