CALIFORNIA — The California housing market may be too pricey for most Gen Z-ers starting in life, but are they doomed to rent or live in multi-generational homes with their family forever? Not necessarily, but it may be along and winding road to homeownership, according to a recent report from Point2.com.
Gen Z accounts for just under 70 million people in America, according to a recent study from Point2.com. These people were born between 1997 and 2012, came of age during the global pandemic, and have learned to find their path. The study showed that due to outside circumstances—student loans, starting salaries, high-interest rates, and limited inventory— the majority of young adults are being priced out of the market in California. The study offers some encouragement, saying that first-time home purchases are still possible in states like Texas, Tennessee, and Nebraska.
Buy/sell, rent/lease residential &
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Still, if Gen Z hopes to live in a major California city, they’re just “California Dreamin,'” according to the study.
We looked at places from Central to Southern California where young people— who can save a portion of their income, have help from family members, or have served in the armed forces— may have a chance of purchasing a starter home.
The study researched 100 major cities, including five New York City boroughs, and ranked them metrics of price-to-income ratios, median sale price differences, inventory available, homes sold above listing price, the number of days on the market, the rate of homeownership for those under 25-years-old, and the rate of unemployment.
If Gen Z prospective homeowners want to get the most out of their money, they likely will need to look beyond the Golden State, as of this report. The top five most affordable places to buy a home in 2024 include:
- #1 – Fort Wayne, IN
- #2 – Corpus Christi, TX
- #3 – Detroit, MI
- #4 – Laredo, TX
- #5Memphis, TN
Buying property in California remains unattainable for many, but it depends on where you are looking and what incentives are being offered for first-time homebuyers.
“California’s red-hot housing market would land Gen Z in hot water,” the study said. Out of the 102 cities in the report, here is how the California cities polled ranked:
- #46 – Fresno, CA
- #56 – Stockton, CA
- #63 – Santa Clarita, CA
- #67 – Santa Ana, CA
- #81 – San Francisco, CA
- #84 – Anaheim, CA
- #85 – Oakland, CA
- #88 – Long Beach, CA
- #91 – Irvine, CA
- #95 – Chula Vista, CA
- #96 – Sacramento, CA
- #97 – Los Angeles, CA
- #98 – Riverside, CA
- #99 – San Jose, CA
- #101 – San Diego, CA
- #102 – Fremont, CA
“When it comes to home price-to-income ratio, major cities in the Golden State find themselves at the bottom once again,” according to the report. “For instance, homes in Irvine cost almost 33 times Gen Z’s median income, while properties in San Diego and Fremont are listed for 23 times that. Although not ideal, homes in Fresno, Stockton, and Chula Vista go for almost nine times the equivalent of what Gen Z members make, on average.”
As of this report, only about 1.8 percent of Gen Z-ers own property in Riverside, fewer than in Los Angeles or San Diego. Though the home price-to-income ratio is among the more affordable options, the home prices in Riverside are rising, and inventory is turning over every 30 days, according to the most recent figures.
Though California remains tough for first-time Gen Z prospective homeowners, cities like Menifee in Riverside County are trying to do something about that.
Menifee recently offered a program to help first-time home buyers receive $100,000 in assistance. The First Time Homebuyer Program is designed to assist lower-income individuals with down payments or closing costs on a first home.
Under the program, the maximum sales price for a single-family residence is $551,000, $494,000 for a townhome/condominium, and $322,500 for a new manufactured home on a permanent foundation. See applicant income limits here. Menifee’s program was made possible by the state’s Building Homes and Jobs Act, passed in 2017, and provides annual funds to the city from California’s Permanent Local Housing Allocation.
Housing prices in Southern California require a downpayment that, for most young adults between 20 and 27, is unattainable without help, with housing prices for a two-bedroom, two-bathroom house averaging in the $400,000 range across Riverside County.
Redfin analysts are optimistic that affordability will begin to improve in 2024.
“Many of the factors that made 2023 the least affordable year for homebuying on record are easing,” said Redfin senior economist Elijah de la Campa. “Mortgage rates are under 7 percent for the first time in months, home price growth is slowing as lower rates prompt more people to list their homes, and overall inflation continues to cool. We’ll likely see a jump in home purchases in (2024) as buyers take advantage of lower mortgage rates and more listings after the holidays.”
For further information on Menifee’s First Time Homebuyer Assistance Program, application details can be found on the NPHS website.
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