Homeownership Coming Later in Life for Californians

Instead of measuring California’s housing crisis in terms of dollars and cents, you can also look it in terms of time.

According to the Public Policy Institute of California, residents of the state now wait longer to become homeowners than they used to, and longer than people almost anywhere else in the nation.

The institute noted that California’s homeownership rate (56%) is well below the rest of the country (66%) with only New York having a lower rate (54%). To see just how much later that milestone now arrives, and for whom the wait is longest, the institute said it used recent American Community Survey data to track homeownership rates by age.

According to PPIC, in much of the country, homeownership rates rise rapidly for young adults in their 20s and 30s. By age 37, half of young adults in the rest of the nation own their home, the institute said.

In California, at every age through the 30s and most of the 40s, renters outnumber owners, the institute noted. It is not until Californians reach their late 40s that homeowners finally become the majority, it said.

Most in California are Renters

That means most working-age Californians are renting.

Moreover, in the past 15 years the age at which homeownership becomes the norm has steadily increased, tracking the state’s rising costs of home ownership. A milestone that once arrived for half of Californians by age 39 now occurs at age 47—compressing the years in which owners can build equity before retirement. Increases have been less pronounced in the rest of the nation.

According the PPIC, homeownership arrives earlier—and is more common at every age—for white and Asian Californians than for Black and Latino Californians. That echoes the state’s long-standing income and wealth gaps across these groups.

PPIC noted that U.S.-born Asians are the youngest when reaching the majority homeownership milestone, while Black adults and foreign-born Latinos are the oldest. It said that education tells a similar story: Californians with a bachelor’s degree reach the homeownership milestone years earlier than those with less education.

Homeownership remains the single largest source of wealth for middle-income families, PPIC noted, and pushing that milestone a decade later means much less time to build equity before retirement. It also means that more Californians are entering their 60s and 70s still paying a mortgage as the state’s population is aging rapidly and the ranks of older renters are growing.

The post Homeownership Coming Later in Life for Californians first appeared on The MortgagePoint.