The sense that a “rent-forever” economy is unfolding looks to be accurate.
According to estimates from the U.S. Census Bureau, the number of households that rent and also make $150,000 or more in annual income went up by 87% from 2016 to 2021, per the Wall Street Journal.
This comes after historic lows in interest rates drove a home-buying frenzy until the Federal Reserve began hiking interest rates due to high inflation in 2022.
The 30-year fixed mortgage average dropped in mid-2020 and continued to be low through fall 2021, per the St. Louis Federal Reserve. Then, it began to climb sharply in early 2022, and the Fed began raising interest rates in March to curb inflation. Mortgage demand dropped to a record low in March 2023.
All the while, housing costs have continued to outpace income. According to an Online Mortgage Advisor analysis, housing costs in the U.S., in particular, have outpaced wages. The top 10 out of 218 global cities seeing the largest drop in housing affordability were in the U.S.
As one expert told the WSJ, this is all putting even more pressure on renters.
“There are markets that are already tough on lower- and middle-income renters, and it’s just becoming more difficult with this influx of higher-income earners,” Whitney Airgood-Obrycki, a researcher with Harvard University’s Joint Center for Housing Studies, told the outlet.
A few high earners discussed not being able to buy a home with the WSJ.
“It’s not what I envisioned, to be in a two-bedroom apartment with my son,” said Lee Robbins, an accountant of 36 in Florida, who makes six figures.