Home ownership has long been central to the American Dream. It is the primary source of wealth for most families, and in the long run, it provides families with more stable and lower housing costs compared to renting. Yet, primarily due to high real estate prices in the state, home ownership is out of reach for many Californians. Racial gaps in homeownership are large and persistent. Rapidly rising home prices threaten to make home ownership even more inaccessible for low- and middle-income Californians.

Homeownership rates in California are the second lowest in the nation, according to 2016-2020 estimates from the American Community Survey. Statewide, only 56% of households own the home they live in, compared to 65% in the rest of the country. Only New York has a lower rate (55%). Statewide (and nationwide), homeownership rates tend to be high in rural and suburban areas, and low in major cities and metropolitan areas.

In California, homeownership rates are highest in Sierra Nevada counties and lowest in agricultural and urban areas. Sparsely populated Alpine County has the highest homeownership rate in the state (80%), while San Francisco County has the lowest (38%). Among the state’s largest cities (those with at least 100,000 housing units), homeownership rates range from 37% in Los Angeles to 59% in Bakersfield. The small and expensive suburbs of Rolling Hills (an incorporated city and gated community near Long Beach), Monte Sereno (near San Jose), and Villa Park (Orange County) have the highest homeownership rates in the country. Condition (95%).

Remarkably, homeownership rates have not changed much over the past 60 years in California or the rest of the country, a time of dramatic population growth and demographic change (including age distribution, l ethnicity and citizenship). Rates are slightly lower in California today than 60 years ago (58% to 56%); in the rest of the United States, rates have increased since 1960, but only modestly (62% to 67%).

Historically, the only dramatic increase in homeownership rates in the country and in California occurred from 1940 to 1960. This increase was the result of a perfect storm of political, political, demographic and economic change – and probably won’t happen again. The post-World War II economic boom saw a strong expansion of employment and incomes, the development of suburbs, the adoption of 30-year mortgages, housing and education policies such as the GI Bill, and a marriage and baby boom that created strong demand for homeownership.

Since then, California’s lack of homeownership growth relative to the nation has been due at least in part to high housing prices in the state. The median value of owner-occupied homes in California was 2.5 times that of the rest of the country in 2020, up from 1.3 times in 1960, according to the American Community Survey. And even though state and federal policies have long encouraged homeownership, either through tax policy, mortgage finance systems (such as Fannie Mae), or local zoning that restricted residential land use to homes single-family homes (aside from some major recent changes), homeownership rates remain little changed.

Californians today are concerned about high housing costs, according to the PPIC Statewide survey. About two in three Californians say housing affordability is a big issue in their part of the state, and nearly half (46%) say their housing costs are causing them to seriously consider moving elsewhere in California or out of state. Interstate migration trends show that many leave the state due to housing costs. From 2010 to 2021, about 500,000 people moved from California to other states to find cheaper housing or to own rather than rent, compared to 140,000 who moved to California for the same reasons, according to population surveys. current.

Of course, there are no easy answers. Many, including PPIC, cited the need to build more housing. California ranks 48th among states in the number of housing units per capita and has added 3.2 times as many people as housing units over the past decade. In recent years, the Governor and Legislature have passed a number of bills to encourage more construction, and some local governments are looking for ways to prioritize more housing development. However, housing policy must also consider environmental goals, including greater density and access to public transit, as well as any future impacts of climate change.

Going forward, PPIC will continue to examine trends in homeownership, examine the effects of policy changes, and connect them to long-term demographic and economic changes that will shape the California housing market in the future. over the next few decades.