Our society holds education as a highly desirous virtue. More education translates to a better career, higher income, greater respect from peers and a broader array of opportunities. However, this assumption doesn’t necessarily translate to homeownership.

Higher educational attainment can mean more opportunities for homeownership, but it’s no guarantee — especially in California.

The trend in homeownership rates more closely corresponds with income levels. For instance, the highest average income is attained by those with professional degrees, such as doctors and lawyers. Nationally, the average professional degree holder earns $134,700 annually. This group also has the highest average homeownership rate, at 76%, according to Trulia.

In contrast, those with doctorates (a degree requiring more years in school than a professional degree) have a slightly lower income and homeownership rate, at $117,700 and 74%.

On the other end of the spectrum, the median income of individuals with only a high school diploma is just $48,900. The homeownership rate of this group is 56% nationwide.

Bachelor degree holders are in the middle, averaging $82,200 in annual income and a homeownership rate of 67%.

However, this situation is markedly different across California’s varied metro areas, where incomes tend to be higher and homeownership rates are decidedly lower than the national average.

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California’s low homeownership rate to continue

It takes more than an education to become a homeowner in California

Across California’s major metros, homeownership rates are several points lower on average than the U.S.

For instance, bachelor degree holders in California have homeownership rates that more closely resemble high school degree holders in the rest of the nation. Bachelor degree holders have a homeownership rate of:

  • 71% in Riverside-San Bernardino;
  • 70% in Sacramento;
  • 64% in Oakland;
  • 63% in Orange County;
  • 62% in San Jose;
  • 58% in San Diego;
  • 50% in Los Angeles; and
  • 45% in San Francisco.

Bachelor degree holders have a lower than average homeownership rate in every major California metro except Riverside and Sacramento.

The statewide homeownership average is 53.8% as of mid-2017, according to the U.S. Census. For reference, homeownership peaked in California at nearly 61% in 2006, the height of the Millennium Boom. This homeownership rate was artificially (and temporarily) inflated by no doc loans, zero down loans, adjustable rate mortgage (ARMs) and an overly exuberant force of homebuyers and the real estate professionals who assisted them. A large population of individuals who lacked the ability to sustain ownership purchased during the Boom, only to lose their homes during the following foreclosure crisis.

Since then, homeownership has dropped to its current low, below the historic average of around 55%.

Regardless of degree type, homeownership rates in California historically trend around 10 percentage points lower than the U.S. average. This is due to a combination of factors, particularly the state’s high housing costs. The high cost of housing holds back economic growth in other areas and prevents renters from saving up for a needed down payment, preventing them from becoming homebuyers.

California’s low homeownership rates are a cause of concern for real estate professionals, who rely on fees generated by sales and other real estate activities to make a living. This is reflected in the stagnant home sales volume experienced in California since 2014.

Homeownership is expected to make a small comeback towards the conclusion of the next housing boom. At the current rate of recovery, this is anticipated to arrive around 2019, reaching a peak in 2021. But homeownership won’t rebound to the heights of the Millennium Boom for at least another generation — once the mistakes of the financial misconduct characterizing these years are forgotten long enough to be repeated.