California’s homeownership rate increased slightly to 55.2% in the fourth quarter (Q4) of 2018. This was up from the homeownership rate of 54.4% experienced in the prior quarter.
After trending down from its 60.7% peak in 2006 to its present level of 55.2%, the homeownership rate has recently stabilized at a normative level for the state.
California’s homeownership rate typically falls around 10 percentage points below the national average, partly due to the state’s more mobile population. Another culprit for California’s low homeownership rate is a lack of residential construction sufficient to support the state’s ever-growing population. This supply-and-demand imbalance forces homeownership out of reach for many would-be homebuyers, a dynamic which legislators are finally taking notice of in 2019. Spurred on by legislation to combat the state’s housing crisis, expect the homeownership rate to remain mostly stable in the coming years, even as we head into the next recession, expected in 2020.
Past, present, future
California’s homeownership rate ballooned during the Millennium Boom, only to plunged with the great recession. California’s homeownership rate has finally stabilized around 55%, and what factors will contribute to future increases and decreases?
California’s homeownership rate is historically around 10 percentage points below the national homeownership rate (at 64.8% as of Q4 2018). This is due to a combination of factors, including the lesser impact the national policy of pushing the “American Dream” of homeownership has had on more mobile Californians.
California’s rate of homeownership has declined dramatically since the 2008 Great Recession, a drop of nearly seven percentage points since its peak year of 2006. (If underwater homeowners are excluded from the number of homeowners since they have no equity stake in their properties, the California homeownership rate is closer to 50%.)