By Vanguard Staff
SACRAMENTO, Calif. — California’s housing affordability crisis is delaying homeownership until increasingly late in life, leaving millions of working-age residents renting longer and reducing the time families have to build housing wealth before retirement, according to new research from the Public Policy Institute of California.
More than half of Californians do not become homeowners until age 47, compared with age 37 in the rest of the United States, according to an analysis published Wednesday by PPIC researchers Marisol Cuellar Mejia and Hans Johnson.
The findings illustrate how California’s housing shortage and high costs affect more than monthly budgets. Delayed homeownership can have long-term consequences for wealth accumulation, retirement security and economic inequality.
California has a homeownership rate of just 56%, compared with 66% across the rest of the country, according to PPIC. Among states, only New York has a lower homeownership rate, at 54%.
PPIC researchers analyzed recent American Community Survey data to determine how homeownership changes as Californians age.
The differences between California and the rest of the country emerge relatively early in adulthood.
Across much of the United States, homeownership rises rapidly as people move through their 20s and 30s. By age 37, half of adults outside California own their homes.
California follows a dramatically different trajectory.
Renters continue to outnumber homeowners throughout their 30s and during most of their 40s. Homeowners do not become the majority until Californians reach their late 40s, meaning most working-age residents of the state remain renters.
The divide has also widened substantially over time.
Fifteen years ago, half of Californians had reached homeownership by age 39. That milestone has now been pushed back eight years, to age 47, as the cost of owning a home has increased.
The shift has been considerably smaller elsewhere in the country, according to PPIC.
That delay has consequences that can continue for decades because homeownership remains a primary mechanism through which middle-income households accumulate wealth.
Someone purchasing a home at 47 has significantly fewer working years to build equity before retirement than someone purchasing at 39.
The growing delay also means more Californians are reaching their 60s and 70s while still carrying mortgage payments at a time when the state’s population is aging and the number of older renters is increasing.
The homeownership divide is not distributed equally across California.
PPIC found substantial differences based on race, ethnicity, educational attainment and whether residents were born in the United States.
White and Asian Californians generally become homeowners earlier and have higher homeownership rates across age groups than Black and Latino Californians, reflecting broader racial disparities in income and accumulated wealth.
Among the demographic groups examined by PPIC, U.S.-born Asian Californians reach majority homeownership at the youngest age, while Black Californians and foreign-born Latinos reach the milestone latest.
Education produces another significant divide.
Californians with bachelor’s degrees reach majority homeownership several years earlier than residents with lower levels of educational attainment, according to the analysis.
Those disparities are particularly significant because housing equity represents one of the most important sources of household wealth.
Separate PPIC research released this year found that home equity and retirement savings are typically Californians’ largest assets. Among households that have home equity, the median value is $572,000.
But access to that wealth is highly unequal.
Only 51% of California households have home equity, according to PPIC’s April analysis of wealth in the state. Older households are about three times as likely to own homes as younger households, with homeownership rates of 69% among households headed by someone older than 65 compared with 21% among households younger than 35.
The resulting wealth divide is substantial.
California households headed by someone older than 65 have median net worth of approximately $708,000, compared with $50,000 among households headed by someone younger than 35.
Educational disparities are similarly pronounced. Households in which at least one person holds a four-year college degree have median net worth of $618,000, compared with $69,000 among households without one.
Racial disparities are even more stark.
PPIC found median household wealth of approximately $637,000 among Asian households and $538,000 among white households, compared with $101,000 among Black households and $56,000 among Latino households.
Those disparities mean California’s delayed path to homeownership can reinforce existing economic inequalities because households already facing barriers to buying a home also lose years in which they might otherwise accumulate equity.
The findings come as housing affordability remains one of California’s most persistent economic challenges and policymakers debate how to expand access to homeownership.
California voters this fall will consider a statewide proposition intended to reduce down-payment barriers for first-time homebuyers, PPIC noted.
Researchers also pointed to expanding the state’s housing supply and providing greater assistance to residents facing the largest barriers to homeownership as potential components of the policy response.
The findings suggest California’s housing crisis increasingly represents not simply a question of whether residents can afford their monthly rent or mortgage but whether an entire generation will have sufficient time to accumulate the housing wealth previous generations relied upon for economic stability and retirement.
With the age at which most Californians own a home rising from 39 to 47 in just 15 years, the state’s affordability crisis is increasingly measured not only in dollars but in years of lost opportunity to build wealth.
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