In recent years, nearly 75% of the most populated U.S. metros (35 out of 50) have seen an increase in wealthy renters. The jump has been led by Raleigh, North Carolina, and Orlando, Florida, according to a new report from Redfin.
In Raleigh, 7.7% of renters are wealthy, up from 4.8% in 2019, and, in Orlando, 10.8% are wealthy, up from 8.5% in the same time frame. Buffalo, New York (6.6%, up from 4.6%); Tampa, Florida (9.4%, up from 7.9%); and San Diego (9.3%, up from 8%) have also seen increases.
“Many affluent Americans are choosing leases over mortgages because the cost of buying a home has jumped significantly more than the cost of renting one in recent years,” says Redfin senior economist Elijah de la Campa. “With mortgage rates near 7%, renting frees up cash for other investments that may be more lucrative than real estate.”
The typical wealthy renter in the above metros earns more than they would need to afford the median-priced home for sale, Redfin says. Yet the cost of buying a home in those metros has risen more than the cost of renting since 2019. Four out of five of these metros are in the Sun Belt, which saw home prices hike during the pandemic.
Across the country, the income needed to afford the median-priced home is up 36.9% from 2019, while rents are up 28.1%. High home buying costs aren’t the only reason many affluent Americans opt to rent, according to Juan Castro, a Redfin Premier real estate agent in Orlando.
“For a lot of folks, renting is all about opportunity. The U.S. economy and job market are in flux, and people want to be able to move and flow as things change,” Castro says. “I have friends who sold their home in favor of renting because they want the flexibility to move fast if their dream job surfaces in another state. They believe many employers won't offer remote work moving forward, and don’t want to be stuck with a home that may be difficult to sell quickly.”
Notably, while wealthy renters gained share from 2019-2023 in most metros, renting in general became less common. In nearly every major metro, the renting rate dropped. Largely due to mortgage rates hitting a record low during the period, prompting people to buy homes. The fact that wealthy renters became more common while renting became less common suggests that many people who switched from renting to owning during the pandemic were not in the top income bracket, according to Redfin.
San Jose, California, has the highest share of wealthy renters across the 50 metros at 11%, with Orlando (10.8%), San Francisco (10.4%), New York (10.3%), and Seattle (9.9%) following closely. All of these metros, with the exception of Orlando, have long been expensive places to buy. But these metros also have a relatively high share of wealthy renters because renting is a lot more affordable than buying.
The typical affluent person in San Jose would only need to spend 10.5% of their income on rent to afford the median-priced apartment versus 21% to afford the median-priced home for sale, which is the largest gap among the top 50 metros.
“Many wealthy Americans can easily afford the median-priced home but are renting to save up for the high-end home of their dreams,” de la Campa adds. "When housing costs rise rapidly—be it in tech hubs during the early 2000s or Sun Belt boomtowns during the pandemic—that dream home takes longer to save up for, keeping folks renting for longer.”
In contrast, Oklahoma City had the lowest share of affluent renters as of 2023, with just 4.7% of renters earning in the top 20% of local incomes. It’s followed by Cincinnati (4.8%); Hartford, Connecticut (5%); Cleveland (5.1%); and Providence, Rhode Island (5.2%). These metros have among the lowest home buying costs in the country, which is likely why affluent residents are less likely to rent, Redfin notes.
In Birmingham, Alabama, 5.4% of renters are wealthy, down from 7.6% in 2019, which is the largest decrease among the top 50 metros. New Orleans saw a similar drop to 5.4% from 7.5%. San Francisco (10.4%, down from 11.9%); Pittsburgh (5.8%, down from 7.2%); Sacramento, California (5.9%, down from 7%); and Oklahoma City (4.7%, down from 5.8%) also posted decreases in rich renters.
Birmingham, New Orleans, Pittsburgh, and Oklahoma City all have median home sale prices below the national level, and the income needed to afford a home has risen less than the national average, which might explain why some affluent Americans opted to buy. In Pittsburgh, the income needed to afford a home is up 19.5% from 2019, the smallest increase in the nation. The typical affluent Pittsburgh resident earns at least $145,295 per year, nearly four times what they would need to afford the median-priced home.
Redfin’s report is based on an analysis of U.S. Census Bureau, MLS, and county records data from 2019 to 2023, which is the most recent year for which income data is available. Redfin considers a renter “wealthy” or “affluent” if their household income is in the top 20% of local incomes.
This week, Rocket Mortgage announced it has entered into an agreement to purchase Redfin. The acquisition will connect Redfin’s nearly 50 million monthly visitors to Rocket’s mortgage products as the largest mortgage lender.
