The members of Gen Z—those born between 1997 and 2012—are among the most “disadvantaged” groups in the U.S. in terms of homeownership, according to a recent report by Porch.com, partner to home improvement giant Lowe’s. What’s more, the investigation revealed that the the Californian real estate market is particularly brutal for today’s 10- to 25-year-old demographic.
According to the report, the rate of Gen Z home ownership in the Los Angeles-Long Beach-Anaheim metropolitan area is only 8.3 percent, with only 8,812 Gen Z owner-occupied homes, placing the region at number 93 on the list. The entire state of California faces the same issue, finding itself at slot 49 with only Massachusetts it. For reference, the New York metropolitan area has 10.4 percent Gen Z homeownership, putting the NYC hub at 81 and the entire Empire State just above California in 44th place.
These challenges aren’t entirely exclusive to the Golden State, as only 34 percent of adults aged 20 to 34 own homes today. In 1960, that number stood at 44 percent. There is a laundry list of potential reasons this may be the case, but the leading issues are a real estate market dominated by older, wealthier buyers, along with a drastic shift in social and economic norms, according to Porch.
“Millennials (ages 26 to 41) are now America’s largest generation by population and make up 37% of all U.S. homebuyers,” the report states. “Generation X (aged 42 to 57) is smaller in size but its members are in their peak earning years, giving them more financial resources to buy homes. And older Americans in the Baby Boomer and Silent Generations are increasingly choosing to age in place, which has constrained the supply of homes available for younger buyers.”
Younger generations tend to delay major milestones such as marriage and childrearing, which has led to a correlation between places where people get married younger and home ownership.
“States where the typical age for a first marriage is older have some of the lowest rates of Gen Z homeownership, while states where marriage happens earlier have higher rates,” the report said. “Part of this may be simply financial, as a household with combined incomes will have more means to buy a home, and part of it may be lifestyle-related, as a married couple would be more inclined to put down roots in a location.”
However, the most crucial factor that goes into Gen Z home ownership is general affordability in metro areas, with low-cost areas typically coinciding with higher ownership numbers. Perhaps the most important question to pose is, how could they own homes in California? The average cost of a home in L.A. is a blinding $911, 892. The state average does not bring any sighs of relief at its staggering $774,899.
In general, the facts remain: California closing costs in the first half of 2021 averaged $8,219, the median sales price for a home in California saw a 21 percent increase in 2021—compared to the national average of 17 percent, and only 46 percent of L.A. County residents actually own their homes.