5 Questions: The Age of Lifestyle Renters is upon Us

OCTOBER 2024

A question-and-answer session with Tricia Peterson, managing partner and COO at Accord Group.

What are the financial and personal characteristics of lifestyle renters?

Financially, lifestyle renters fall between renters by necessity and renters by choice. In general, this population cohort can afford to buy a home, but not the home they really want to buy — may not be in the neighborhood they want, may not be of the quality they are looking for, may not have the features they are looking for. In particular, given mortgage rates today, even the ability to buy, despite high incomes, is challenged. It is also the case with this cohort that renting is not explicitly a financial decision; it may also be a flexibility and lifestyle choice.

Demographically, this group is higher income relative to renters by necessity, who might typically rent in class B/C workforce housing communities. As a result, this class of renters will generally represent lower credit risk. Their income-to-rent ratios tend to be higher. If the typical income-to-rent ratio for workforce housing renters is three times, we might see them at five times for this cohort. Also:

This group is generally composed of higher-income professionals with better wherewithal to withstand economic downturns.

This group values amenities and their living experience and is willing to pay for a certain lifestyle.

A subsection of this group is called “forever renters” — those who make the choice to rent permanently. Lifestyle renters, however, may buy a home at some point and are not necessarily wedded to renting forever.

What makes them a target demographic for multifamily owners and investors?

Landlords generally have greater flexibility to raise rents with this group of renters due to their higher incomes and high income-to-rent ratios. The latter also results in lower credit risk.

To read the full article, click here.

ABOUT ACCORD CAPITAL PARTNERS LLC

Accord, through its affiliates, is a global capital advisor, principal investor and investment manager. With its headquarters in San Francisco and personnel in Chicago, London, Hong Kong and Seoul, Accord engages with a wide variety of participants in the real estate private equity industry. Accord Capital Partners, its broker/dealer affiliate, provides advisory and capital raising services in the United States. Accord Europe Limited, its broker/dealer affiliate, provides advisory and capital raising services in the United Kingdom and Europe. For further information on Accord, visit: www.accord-group.net.