America’s renter generation is trying to build wealth by investing in stocks instead of owning a house

Natalie and Dan Slagle felt ready to start looking to buy a home after a few years of renting in Portland, Ore. As financial planners, they ran the numbers and decided they could afford to spend about $6,000 a month on their mortgage payments, or around 20% of their income. That put them at a purchase price of about $940,000.

But the houses they saw even at that relatively high price were lacking — one didn't have a finished basement, another needed work on the HVAC system. They submitted two offers and were outbid.

"We just kind of sat down with this, do we really want to be homeowners right now? Or did it just feel like the world is telling us we should be," Natalie Slagle, 35, said. "This feels harder than it needs to be."

The couple called off the house search and decided to keep renting. Paying $4,000 in rent each month, about 33% less than their mortgage payment would have been, also allows them to put more money into another financial asset — their financial-planning business . They took the money that would have been spent on a down payment and used it to make a larger contribution to their daughter's college savings account, purchase new furniture and bolster their cash balance on hand. They are also maxing out contributions to their retirement accounts and investing money in their brokerage portfolios.

"We're constantly going back and forth making sure that regardless of whether we rent or own, we will be financially sound from now until our final days," she said.

A renter generation is emerging in America , composed of younger people who are renting longer and structuring their financial lives without the traditional pillar of home ownership. Many are keenly aware of the pivotal role that home ownership played in building the financial well-being of their parents and the American middle class. They are letting go of the view that home ownership is necessary for financial success and trying to thrive by writing a new script to building wealth that provides ample room for saving and investing.

Renter households earning at least $175,000 (placing them in the top 20% of Americans by income) grew by 1.2 million over the past decade, according to data shared with MarketWatch by Harvard University's Joint Center for Housing Studies. Many of these households could get a mortgage, but they are also well-positioned to take advantage of a moment in which typical rents are now lower than mortgage payments for listed homes across the country, the result of skyrocketing home prices during the pandemic and rising interest rates in the years since.