You know the housing market is really slow when even millionaires are having trouble buying their dream homes and opting to rent instead. But that’s the situation in the housing market here at the end of 2024.
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The Wall Street Journal reported that the number of renters among earners in the top 5% of income has nearly doubled over the last 15 years.
While experts predict the market will change very quickly in 2025 due to interest rates coming down, thus sellers will finally be willing to part with homes they’ve been hanging onto, many markets are still slow to free up inventory.
Housing shortages aren’t the only reason millionaires aren’t buying homes even though they can afford homes at prices that average Americans can’t hope to pay. Here are seven reasons why even these wealthy people are opting to rent right now instead of buying.
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When you have millions to spend, you have the money to be pickier about the house you want. However, according to Zillow, as of 2022, there was a 4.5 million house shortage, limiting the supply for even those with the cash to customize their desires. With money to burn, some millionaires are opting to simply rent until things free up again.
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It’s easy to see millionaires as being able to buy what they want without considering the price, but even wealth has its limits. There are a record number of million-dollar-plus homes on the market in states like California, New York, Florida and Massachusetts, to name a few, according to Zillow, partly a result of the inventory glut. Millionaires are finding it’s simply cheaper to rent than to buy at the moment.
One millionaire, a 29-year-old finance professional in Seattle, Tori Dunlap, prefers renting for the flexibility it allows her, much less the cost savings of owning a home.
“Renting is flexible, and I don’t have to worry about things that homeowners worry about, like committing to a particular place or neighborhood or dealing with a burst pipe,” she told Business Insider.
As someone who travels a lot for work and doesn’t have the skills to do the maintenance on a home, she prefers renting.
Though mortgage rates are starting to decline, they’ve been holding steady at higher rates for the past few years. The current mortgage rate for a 30-year fixed mortgage is around 6.38% at the high end. On a home purchased at even just $2 million, the monthly mortgage payment would be around $12,402, according to a Zillow mortgage calculator.
