So you’re in your late 20’s or early 30’s, and you’re thinking about buying your first home somewhere in California. You scroll through housing websites and realize that you can’t afford a single listing.
Sound familiar? Well, you’re not alone. All seven of the country’s major metro areas with the lowest homeownership rates for 25-to-34 year-olds are in California, a Bay Area News Group analysis of Census Bureau data from 2017 to 2021 has found. And the ripple effect is having a profound impact on more than just young people.
The Los Angeles-Long Beach-Anaheim metro area, where only 2 out of 10 young adults ages 25-34 own their home, scored lowest in the country.
Santa Maria-Santa Barbara was just a fraction better with a young adult home ownership rate of 21%, followed by Santa Cruz-Watsonville (22.5%), San Jose-Sunnyvale-Santa Clara (22.8%), Salinas (23.3%), San Francisco-Oakland-Hayward (23.4%) and San Diego-Carlsbad (23.8%). Our analysis filtered out young people who live with their parents, only including young adults who were identified as the head of their household or were married to the head of their household.
Compare that to the Denver-Aurora-Lakewood, Colorado, metro area (39.7%) or Jacksonville, Florida, (37.8%) or Baltimore-Columbia-Towson, Maryland, where 42.9% of young adults owned their home. The Lake Erie city of Monroe, Michigan, population 20,000 and halfway between Detroit and Toledo, had the highest rate of young adult home ownership at 70.8%.
Many young adults who have searched for a starter home in the Bay Area say they’ve since balked at the idea in the wake of rising interest rates and after seeing sky-high housing prices just keep getting higher.
“[The real estate agents are] still send me listings, and I’m like… two bedrooms, $600,000? Never,” said Jessica Vela, 33, of San Leandro, a mother of six who spent more than a year reaching out to realtors all over the Bay Area to find a home that she and her husband could afford for their family.
Vela, who resells goods like clothing and beauty products online, even worked on improving her credit score to qualify for a housing loan. But after more than a year of searching, she’s now all but given up hope of finding something affordable in the region. She’s stuck renting a three-bedroom home for around $3,000 per month in a neighborhood with a park down the street where her children can safety play.
Even if she finds something in the $600,000 price range, the house “is still going to be needing so much work, and it’s going to be in one of the worst areas in the Bay.”
Experts say that although declining young adult homeownership rates are a national phenomenon, California is faring particularly badly. One recent study published by UC Berkeley’s Terner Center for Housing Innovation found that by 35, most U.S residents had become homeowners. In California, it wasn’t until age 49.
Experts point to a variety of factors, like the student debt crisis and a delay in when people get married, as important explanations for why youth homeownership is on the decline nationally. But there is no surprise what’s behind California’s spectacularly low young adult homeownership rate.
“California’s divergence from the rest of the nation is really due to the affordability crisis,” said Carolina Reid, distinguished professor in Affordable Housing and Urban Policy at UC Berkeley who also works as a faculty research adviser at the Terner Center. “If you’re putting up 35%, 40%, or 50% of your income towards rent, (then) building up that savings cushion, particularly in the face of extremely high house prices, just makes it really difficult to enter homeownership.”
It’s no secret that breaking into the housing market in the Bay Area, where the median single-family house price is $1.25 million, is unattainable to most young adults. But the Bay Area News Group analysis shows even some of California’s more affordable pockets like Salinas have abysmal rates of home ownership for young adults. Experts say that’s probably because young people in areas like Salinas work in the agricultural and tourist industries, and have comparably lower salaries than the young tech workers of San Francisco and San Jose.
What proportion of your neighborhood rents?
The map below shows the percentage of renters in each Public Use Microdata Area (PUMA) in California. PUMAs are census designated areas containing no fewer than 100,000 each. The data incorporates all residents, not just young adults.
But it’s not just about age and geography. Race also plays a major role in shaping homeownership trends. In Alameda, for example, the homeownership rate of White (62.16%) and Asian (63.89%) residents in 2021 was considerably higher than the Hispanic rate (39.9%), and was around double the homeownership rate for Black residents (31.32%).
Experts say that even for the relatively small group of Black and Hispanic residents who do manage to purchase a home, their houses tend to be valued at less than White-owned ones. That makes it harder for those groups to build the sort of generational wealth which White families often rely on to purchase starter homes.
And since younger-aged Millennials and older Gen Zers tend to skew non-White, they may also have a harder time buying a home, worsening the young adult housing crisis.
The consequences of the Golden State’s dismal young adult homeownership rates can impact Californians of every age, experts say. Without being locked into homeownership, many young adults could move away, leading to a graying population. From 2012 to 2022, every Bay Area county aged faster than the nation as a whole. That means fewer young people paying income taxes and working jobs in sectors like healthcare and in-home care, on which elderly residents rely.
“It’s a humanitarian crisis of elderly people who are stuck in these homes, and … there’s nowhere for them to go and no one to take care of them,” said Matthew Lewis, director of communications for the pro-housing group California YIMBY.
Vela says that she thought about moving somewhere she could afford to buy a home. But that comes with its own set of challenges.
“I could easily move to Texas,” she said. “I could get myself acres of land for the price I could get a three bedroom here. (But) I don’t want to have to start all over again.”
