High Income Millennials Are Becoming Lifestyle Renters Rather Than Homeowners

High income millennials are opting to rent in amenity-rich apartments rather than to become homeowners in a market that leaves many first-time buyers glued to the sidelines. The share of lifestyle renters rose in 2021, and this year’s millennial rental applicants are also reporting incomes 10% higher than those of applicants who moved last year. 

According to Realtor.com, 39% of millennial renters in 2021 had individual incomes above $50,000, meaning that a larger percentage of first-time buyers could have flooded the housing market, but instead chose to trade home ownership and mortgages for rental pads with attractive amenities.

But is renting a nice pad better than buying right now? Mortgage rates are still near historic lows—some 30-year rates are still near 3% and 15-year rates near 2%, as you can see here—and experts say they expect them to rise. But at the same time, housing prices rose nearly 20% year over year, which is giving some pause—though many economists and analysts we spoke to don’t see this as a bubble, and instead think prices will continue to rise, though at a more gradual pace, thanks, in part, to constrained supply issues.

The answer of whether to rent or buy depends a lot on your individual circumstances, pros say. From a high level, the rough rule of thumb is that if you don’t plan on staying in the home or area a long time (longer than say 3-5 years), renting is often the better option. This is in part because when you buy a home, you have to factor in closing costs, a down payment, property taxes and more. 

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