High-Income Renter Pool Has Grown 33% in L.A.

The number of rental households earning more than six-figures in annual income is growing. According to a new report from Apartment List, high-income rental households grew by 33% in the last decade, showing that high-income earners are choosing to rent rather than buy a home. The reasons for this trend are potentially vast, and include affordability problems, scarcity of home product and a newfound cultural preference of renting over owning.

“Both “push” and “pull” factors are driving the growth of high-income renters,” Rob Warnock, research associate at Apartment List, tells GlobeSt.com. “Some high-earners are being pushed into the rental market simply because of the scarcity of affordable home-buying options. Others are being pulled or drawn into the rental market by the abundance of rental options that cater to whatever lifestyle they want to live. We have witnessed a boom in multi-family rentals for those who prefer density and centrality, alongside a boom in single-family rentals for those who prefer more space.”

The increase in high-income renters—especially to this level—has a significant impact on the rental market. It fuels the development of luxury housing, increases rental rates and changes the dynamics of the standard—or once standard—rental market. “The growth in high-earning renters is changing the composition of the rental market,” says Warnock. “We’re seeing developers react to this trend by brining online new multi-family supply that’s centrally located and geared towards the higher end of the market. Meanwhile, in supply-constrained markets where very little gets built, richer families are increasingly competing with everyone else for a limited set of places.”