Are you a young adult in your late 20’s or early 30’s thinking about buying your first home in California? As you browse through housing websites, you quickly realize that none of the listings are affordable. Don’t worry, you’re not alone.
A recent analysis of Census Bureau data from 2017 to 2021 by the Bay Area News Group reveals that all seven of the country’s major metro areas with the lowest homeownership rates for 25-to-34-year-olds are in California. This has far-reaching effects beyond just young people.
Out of these metro areas, the Los Angeles-Orange counties area has the lowest homeownership rate, with only two out of 10 young adults in the 25-34 age range owning their home. Santa Maria-Santa Barbara, Santa Cruz-Watsonville, San Jose-Sunnyvale-Santa Clara, Salinas, San Francisco-Oakland-Hayward, and San Diego-Carlsbad all have similarly low rates.
Comparing these rates to other cities across the country, places like Denver-Aurora-Lakewood, Colorado, Jacksonville, Florida, and Baltimore-Columbia-Towson, Maryland have significantly higher rates of young adult homeownership. The city of Monroe, Michigan, has the highest rate at 70.8%, while the Inland Empire in California ranks 90th at 39%.
The California Affordability Crisis
Experts point out that while declining young adult homeownership rates are a national trend, California is experiencing particularly low rates. A recent study by UC Berkeley’s Terner Center for Housing Innovation found that most U.S. residents become homeowners by age 35, whereas in California, it’s not until age 49.
Various factors contribute to this decline, including the student debt crisis and delayed marriage. However, the primary driver behind California’s low young adult homeownership rate is the affordability crisis. The high cost of rent, coupled with soaring house prices, makes it incredibly challenging for young adults to save enough for a down payment.
Limited Opportunities for Minority Homeowners
Even among the limited group of Black and Hispanic residents who do manage to purchase a home, their properties tend to be undervalued compared to homes owned by White individuals. This makes it harder for minority groups to build generational wealth, which often serves as a resource for purchasing starter homes. As younger Millennials and older Gen Zers, who are more diverse in ethnicity, face these obstacles, the young adult housing crisis worsens.
The consequences of California’s dismal young adult homeownership rates affect individuals of all ages. The lack of homeownership options may lead many young adults to leave the state, resulting in an aging population and a humanitarian crisis for elderly homeowners with no place to go or support from caregivers.
It’s clear that addressing the affordability crisis and creating more opportunities for homeownership is crucial for California’s future.
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