LA-Orange County has lowest young adult homeownership rate in US

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 metro area comprising Los Angeles and Orange counties, where only two 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 homeownership 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%).

The 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 with 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 homeownership at 70.8%. The Inland Empire ranked 90th at 39%.

No California dreaming

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 age 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.”

Nowhere to go

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.

“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.