High-income households choosing to rent in the DFW area are growing faster than owner-occupied households. This is the news from a RentCafe picture of wealthy renter households in top U.S. cities. According to RentCafe, households making more than $150,000 have seen a 175 percent increase in renter-household growth between 2007 and 2017, comprising roughly 1.35 million households.
Shifts in buyer mentality, housing availability, changing demographics and other factors are at play. It doesn’t help that Federal Reserve policy has grossly distorted the U.S. housing market in many ways, causing affordable inventory shortages in many markets. Even with general asset price distortion/inflation, average rents have not increased at same rate as home prices in many metro areas. Dallas-Fort Worth is a prime example of this dynamic.
In Fort Worth the number of high-income renter households grew nearly 4.6 times from 2007 to 2017. This was nearly double the 2.5 factor for affluent owner-occupied households in Fort Worth. Dallas has seen a similar dynamic, with the wealthy renter-household group growing 2.9 times, more than double the 1.4 factor of owner-occupied household growth.
While I wouldn’t necessarily classify $150,000 as a high-income household, that kind of money will certainly get you more home in the DFW market than places like San Francisco or Seattle. The growth in renter-households just speaks to shifting attitudes about housing in general in a market that has been severely distorted by central bank policy. The TCJA will likely just facilitate this trend. Millions of Americans recently lost some of their advantages for owning a home due to caps on itemized deductions like mortgage insurance and property taxes. Those caps and limitations just provide more incentive to rent for some higher income households.