Homeownership suffers in California, US as prices outstrip incomes

Growing the share of homeownership – in California or across the nation – remains a challenge with intensely unaffordable housing.

Yes, California’s homeownership rate hit a 13-year high last year — if you ignore the data-challenged, pandemic-twisted 2020 result.

My trusty spreadsheet reviewed annual state homeownership figures from the Census Bureau and found that in 2023, 55.8% of California households lived in a home they owned.

That’s up from 55.3% in 2022. And before COVID-19, you have to go back to 2010 at 56.1% to find a higher rate. But a reality check mutes the cheers.

California caveats

Asterisk No. 1: Yes, California’s 2020 was better at 55.9%, according to the census database.

Yet the bureau’s reports largely disavow much of its nationwide ownership stats from that year due to complications in data collection tied to various coronavirus lockdowns. Still, 2023 was clearly the second-best in 13 years.

Asterisk No. 2: Last year’s 55.8% ownership rate for California was second worst among the states – and far below the nation’s 65.9%. Only New York was worse at 53.3%. No. 3 was Nevada at 61.2%, then Hawaii at 61.8%.

Highest ownership was found in West Virginia at 77%, Delaware at 75.7%, Maine and Mississippi at 75.5%. The Golden State’s economic rivals Texas was No. 44 at 63.6% and Florida was No. 32 at 67.3%.

Asterisk No. 3: It’s a meek improvement. California ownership was only 1 percentage-point better than the 54.8% in pre-pandemic 2019. That was the 34th-best performance among the states and below the 1.7 gain nationally.

The biggest gains were found in North Dakota (4.3 points), Connecticut and Arizona at 3.9. Biggest drops New Jersey, off 2.3 points, Ohio and Utah, off 1.6 points). Texas was No. 31, up 1.2 points. Florida, No. 29, up 1.3.

Last year’s California homeownership rate was equal to the state’s 40-year average at 55.8%. And the nation’s 2023 rate was only 0.2 percentage points better than the 65.7% norm since 1984.

Considering how much effort is put into boosting ownership, not much progress.

It took the crazy subprime lending era (which ended badly) to create record high ownership – 60.2% in California in 2006, while the nation peaked in 2004 at 69%.

Who can afford this?

Even many of California’s best-paid workers struggle to buy a home.

Consider an “affordability” index created by my spreadsheet. It looked at the 75th percentile income in 50 states as of May 2023 – that’s the median of the upper half of all annual wages – from the Bureau of Labor Statistics. Those salaries were measured against a state’s typical home values, as tracked by Zillow.

In California, this pay yardstick at $93,250 annually ranks third-highest in the nation compared to $70,035 nationally. That’s 33% higher.

Tops for upper-crust paychecks was Massachusetts at $98,110, then Washington at $95,180. Lows? Mississippi at $55,870, Arkansas at $58,900, and South Dakota at $59,980. California rivals Texas was No. 22 at $72,640 and Florida was No. 30 at $67,600.

Then ponder pricing, California’s bane. The typical statewide residence was No. 2 costliest in the US last year at $753,800 compared to $325,750 nationally. That’s 131% higher. Yes, more than double.

Top home prices were in Hawaii at $848,700. No 3. was Massachusetts at $586,600. Lows? West Virginia at $157,400, Mississippi at $177,100, and Kentucky at $200,300. Texas was No. 29 at $305,600. Florida was No. 17 at $390,800.

Sadly, California’s high wages can’t keep up with insane pricing.

Imagine the buying power of a 7% mortgage for a borrower devoting 40% of those 75th percentage wages to the house payment.

Those California wages buy only 61% of the typical residence. That ranks next-to-last and well below the 110% nationally.

Only Hawaii was worse at 45%. No. 3 was Utah at 69%. Tops was West Virginia at 193%, Ohio at 165%, and Illinois and Mississippi at 157%.

And Texas was No. 20 at 118% and Florida was No. 38 at 86%.

Affordability, or a lack thereof, explains California’s low homeownership.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com