Renting among young millionaires is doubling, according to reports
The number of young American millionaires—millennials and Gen Zs—is on the rise. But, even if they have that seven-digit annual income, most of them are holding on the idea of buying a new home, at least for now, because of the soaring prices.
Reports suggest that, in the past four years, the average mortgage payment has increased by a whopping 96% - or nearly double - compared to recent years. A Zillow report stated that an average buyer must shell out at least $2,200 per month for a mortgage, saying that they can afford the 10% down payment for a new home. Based on current numbers, today’s housing costs are far beyond the traditional affordability threshold of 30% of the median household income of $74,580.
“Look at any major city, look at the stagnating minimum wage, look at the housing costs going up and also rent going up — it’s not easy to live anywhere right now,” said Her First $100K founder Tori Dunlap in a Moneywise interview last year.
Dunlap has been living – and renting – in Seattle where the average housing price was $779,900 as of December 2023, Moneywise reported, citing Realtor.com data.
Because of rising housing costs, these young millionaires opted to rent instead since it is more affordable.
Moneywise, citing a RentCafe report, said that the number of millionaires who are opting to rent a flat or an apartment instead of owning their dream home has tripled in the last five years. Thirty-six per cent (36%) of them are millennials and Gen Zs, according to the report.
But this does not mean that these young millionaires are ditching the idea of owning a house for life. It is just that these moneyed millennials and Gen Zs are being wise about where to put – and grow - their money. Moreover, they think that this is not the right time to own a property, the Moneywise report stated.
“If homeownership isn’t right for your life at this point, you could consider necessity-based real estate as a way to invest in this asset in the commercial sector,” according to Moneywise.
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