Buying a house is a big part of the American dream. But is it too far away to reach the goal? It’s like the holy grail for a lot of young people in California.
In California, most people who buy their first home are now almost ten years older than they were in the 1980s. That’s what a new study from the University of California, Berkeley says about California’s “sliding homeownership ladder.”
The simple truth is that Californians are buying homes later in life than they used to. As of 2021, most people in California don’t own their own home until they are 49 years old. The wait is the longest one that researchers have seen in the history of buyers in the United States.
Researchers said that California’s homeownership gap compared to the rest of the country is mostly caused by people not wanting to own a house but being able to afford one.
“While the typical timing of life cycle milestones like marriage and having children can also affect rates of homeownership, most of the gap comes from residents’ inability to afford a home in the state,” the research paper said, explaining why it seems impossible for people in the Golden State to buy their own home.
Researchers found that the difference in the homeownership rates between people in California and the rest of the U.S. (ages 25 to 75) is mostly due to differences in their ability to buy a home. In the last 10 years, the median home value in the U.S. has almost doubled, but the median household income has only grown by 13.5%.
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This study shows that 43.5% of people aged 25 to 75 owned their own home in 2021. In 2000, this number was 49.8%. The drop was even bigger for Californians between the ages of 35 and 45, which is when a lot of people in other states buy their first home, the study paper said. The number of people in that group who owned their own home dropped from 49.5% to 39.7%, which is a drop of almost 10% in just 20 years.
This study also shows that over the past 40 years, the rates of homeownership have dropped especially sharply for Black and Hispanic people.
“The drop in homeownership since 1980 is especially noticeable for some groups, such as Black and Hispanic/Latino people. This adds to the problems these groups already have because of policies that have been unfair to them in the past, like redlining, exclusionary zoning, and not being able to get loans,” the research paper said.
The researchers thought that buyers would have been better off if home prices in the state had grown more slowly. The study paper said, “Had housing prices in California risen from 2000 to 2021 at the same rate as those in the rest of the country, about half (48%) of California’s drop in homeownership rate over that time could have been avoided.”
The Tenth Census, the American Community Survey (ACS), and the Survey of Income and Program Participation (SIPP) were the main sources of data used in this study. The Terner Center for Housing Innovation at UC Berkeley said that each had its own pros and cons when it came to figuring out trends in housing.