By Bill Hethcock – Senior Reporter, Dallas Business Journal
A growing number of higher-income millennials are renting instead of buying a home in North Texas, according to a new study.
The trend toward “lifestyle renting” by millennials is especially evident just outside of major cities, according to new research from RentCafé.
In Arlington, millennials generated a 61% rise in rental applications — more than any other buying age group, according to RentCafé. In McKinney, applications from millennials earning more than $50,000 annually increased by 51%. And rounding out the top three in North Texas is Denton, with a 39% increase, according to RentCafé’s analysis of 5.9 million rental applications nationwide.
Compared to last year, millennials earning even higher incomes have turned to renting. Specifically, in Arlington, new applicants for apartments earn a median wage of $57,500, while last year’s new applicants earned $42,000, the study says.
The difference is significant in other North Texas cities as well. In McKinney, new millennial renters earn $6,000 more than last year’s applicants, while in Denton, the difference is of more than $2,000.
Fort Worth and Dallas also saw their fair share of millennial applications, but the growth within the city limits of North Texas’ biggest burgs was slower than in most surrounding cities. In Fort Worth, applications from millennials earning more than $50,000 increased by 19%, while in Dallas, they rose by just 8%.
All Dallas suburbs experienced higher increases in millennial lifestyle renters compared to the city of Dallas.
The lifestyle renting trend is playing out nationwide, as renting continues to be the choice in 2021 for a growing number of people with incomes that might allow them to purchase a home, RentCafé found. The share of applications coming from millennial renters with individual incomes of more than $50,000 reached a five-year high of 43% in 2021, according to the apartment search website.
More broadly, 39% of all applicants in 2021 had individual incomes above $50,000 — up from 32% five years prior. This year’s rental applicants are earning on average 10% more than those who moved last year, which works out to $4,300 more in annual wages, according to the analysis of rental application data.
Macon, Ga., was the U.S. city that saw the biggest change in the share of rental applications from higher-income millennials, with an 83% increase. Mesa, Ariz., and Spokane, Wash., were Nos. 2 and 3, respectively, with 78% and 75% increase in their share of applications from higher-income millennials.
Arlington was the top Texas city and ranked seventh nationally, with its 61% rise in rental applications from millennials earning $50,000 or more. McKinney, with its 51% increase in applications in that category, ranked 17th in the U.S.
In addition to soaring home prices, housing analysts say that rising inflation and interest rates make it increasingly difficult to save money for a down payment.
Lifestyle renters have above-average incomes that would allow them to buy in a less competitive market the study notes. Renting with a bigger budget allows them to live in higher-quality, amenity-rich apartments.
The trend is most noticeable among millennials, but the home-buying market frenzy and other factors are deterring other generations, too. Generation X and Baby Boomers also saw a rise in applications from higher-earning renters in 2021.
