The study highlights the rising costs of homeownership in Golden State, particularly compared to rent costs.
California has the widest gap between mortgage payments and domestic rental costs, according to analysts.
“Historically, people will borrow, save money, buy a home. But there’s really no hope if the rent is high and the home is even higher,” Joel Kotkin, a fellow in urban studies at Chapman University, told the Epoch Times. “Purchase is becoming increasingly difficult unless you inherit wealth or have money from abroad.”
Bankrates revealed that California cities are at the top of the list when it comes to expensive homeownership, comparing average monthly mortgage payments for the 50 largest US metropolitan areas, particularly when compared to rent.
San Francisco has achieved a 190.7% buying and renting gap, making it the largest in the nation. Typical monthly mortgage payments in San Francisco were around $8,882, up 4.7% year-on-year, but typical rents fell 1.7% year-on-year.
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San Jose is close to two seconds on the list, with homeowners branching out mortgage payments 185.6% higher than rent. A typical mortgage payment is $9,438, an increase of 10.5% year-on-year, while rent is around $3,305, a decrease of 1.3% year-on-year.
Los Angeles and San Diego have seen similar trends. Mortgage payments in Southern California’s largest metropolitan area are 88.5% and 79.9% higher than rent, respectively, landing sixth and ninth compared to other US metros in the study.
“If you’re in the coastal market, you have to see this home as a very long-term solution,” said Skylar Olsen, Zillow’s leading housing economist, in a statement. “In California, people are well known for leaving their homes with famous children, which is why these very expensive markets have very long tenures.”
California housing costs
California homes are about twice as expensive as typical American homes, reported Laos, California, citing data from Zillow. The California middle class home will cost around $789,000 in 2025, compared to the US average of $361,000.
Mid-Tier Home monthly payments reached nearly $5,900 a month in March 2024, with prices increasing by 82% since January 2020, California Laos reported. Bottom home payments reach more than $3,500 a month, representing an 87% increase since January 2020.
Lack of homeownership
Amidst rising prices, 70% of Californians believe that children today will be financially worse than their parents, according to a 2024 PPIC-wide survey.
The survey found that 29% of Californians skipped meals or ate food to save money within the previous year, while 17% used the benefits of CalFresh (food stamps). Additionally, 20% put healthcare on hold as a result of financial constraints.
According to Mark Schniep, director of economic forecasts, the main issue is housing.
“But there’s not much we can do about it other than building it more,” Schniep told the Epoch Times via email. “But given current regulations and current zoning, it’s unlikely we can build it well.”
“Coastal Act, CEQA, land costs and many local regulations are hindering housing development,” he added.
Kotkin agreed that state policies contributed to the shortage of affordable housing, making it difficult to build on otherwise cheaper locations.
“What is essentially approved is the increasingly dense and expensive central cities,” Kotkin said.
The bottom line, he said, is home ownership a key part of preparing for retirement. If you own a home, you can stay there once you retire.
“A home is an asset,” he said. “The (owners) can rent, sell for it, then they can retire comfortably.”
But if more and more people are forced to borrow, “people will generally look to the state or other institutions to take care of them. “They will rent for the rest of their lives. That means they will not have any assets when they retire. They will depend on payments for the state relocation.”
He considers such dependencies to be incompatible with democracy.
“Democracy is built on the fact that there is some degree of independence in most of the population,” he said. “If you own a home, you have some degree of autonomy that allows you to think of it in a different way than if your landlord relies on the fact that he may decide to increase his rent by 50%.”
