Homeownership barriers drive trend in San Diego and across the nation
Luxury apartment buildings seem to pop up like weeds in downtown San Diego, but a lot of us might wonder who can afford a one-bedroom with a view of the bay.
It turns out, quite a few.
From 2008 to 2017 the number of renters who earn $100,000 and up annually, jumped 37 percent in the San Diego metropolitan area. Adjusted for inflation, the increase shows many well-heeled San Diegans have chosen rentals over a competitive home market.
Affluent renters have a number of reasons for choosing to rent than buy, said website Apartment List, which crunched the numbers, including increasing barriers to homeownership and a desire to be near work and interests.
The Census Bureau’s American Community Survey said San Diego metro had 112,019 renters in 2017 earning at least $100,000 a year. Out of 50 metros areas studied by Apartment List, San Diego was ranked 11th for the most high-end renters, below areas like San Jose, Seattle, Houston, Dallas and Boston.
New York City is home to the richest renters, followed by the metro areas of Los Angeles, San Francisco and Washington, D.C. Hartford, Conn., has the least.
Rob Warnock, researcher at Apartment List, said one surprise from the numbers was where high-end renters grew the most. The biggest percentage increases in rich renters were in mid-sized metro areas, like Denver, Oklahoma City and Austin, Texas.
A lot of those areas did not have many affluent renters back in 2008, so the growth is more dramatic as those places experience job growth and more multifamily construction.
San Diego metro was ranked 41st out of 50 in terms of the growth of high-income renters from 2008 to 2017. But, that isn’t a huge shock because there have been a lot of rich renters for years. In San Diego in 2008, 22 percent of high-income households were renters — high compared with most cities — and increased to 26 percent by 2017.
“The wealthy households in San Diego were already renting back in 2008,” Warnock said.
It isn’t just San Diego seeing more higher income earners renting. The trend is widespread as the same factors play out across the nation. Also, it isn’t just wealthy households renting — it’s most of us. In the last decade, the U.S. population of renters has increased by 15 percent.
Apartment List said saving for a down payment is still a hurdle for high-wage earners because of student loans, which push money out of what would traditionally go toward a down payment. It is also seen as a reason why millennials, across all income levels, lag previous generations in homeownership.
But other factors are in play as well: Stricter credit requirements for mortgages, demographic shifts of high-income Americans living in dense urban centers instead of suburbs, a surplus of single-family homes added to the rental market after the recession and an increase in multifamily construction.
The influx of new high-end apartments the past few years in San Diego County has pushed up rents. The average rent hit $1,960 a month in September, said San Diego-based MarketPointe Advisors, up from $1,344 in September 2008.
Warnock, of Apartment List, predicted inequality debates in cities would be increasingly fueled by high-income renters competing for apartments against those who earn less. But, it could also mean momentum for policy changes at the federal level.
He noted recent efforts and comments by Sen. Elizabeth Warren, D-Mass., and Rep. Alexandria Ocasio-Cortez, D-N.Y., on housing affordability that could be bringing homeownership discussions to a more national level.
San Diego Union-Tribune