Renters could be putting their dollars to better use elsewhere. According to a report by Zillow, the average U.S. renter could qualify to own a nicer home than their current rental, if they chose to buy.

To break it down, the nationwide median rent paid is $1,416 as of March 2017. Armed with a 20% down payment and a 4.2% 30-year fixed rate mortgage (FRM) rate, the average renter could use this same rental payment to qualify for a $289,500 home, valued 48% higher than the national median home value. In addition to the monthly mortgage payment, this analysis includes the cost of property taxes, homeowners insurance and regular maintenance.

Nationally, the average renter can qualify for a significantly more expensive home with their same rent payment. Here in California, the story is more nuanced.

California renters generally don’t have access to a full 20% down payment, partly because excessively high rents and other high costs of living limit saving.

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Coastal versus inland California

Across California, the average, creditworthy renter can qualify:

  • in Anaheim, for a home value of $540,200 with the median rent of $2,642;
  • in Bakersfield, for a home value of $279,100 with the median rent of $1,365;
  • in Chula Vista, for a home value of $491,300 with the median rent of $2,403;
  • in Fresno, for a home value of $256,800 with the median rent of $1,265;
  • in Riverside, for a home value of $369,900 with the median rent of $1,809;
  • in Santa Clara, for a home value of $709,900 with the median rent of $3,472; and
  • in Santa Monica, for a home value of $1,026,800 with the median rent of $5,022.

How do these amounts compare to local home values?

In the state’s inland areas where housing is cheaper, renters match the national trend. With the same rent payment, renters qualify for a home valued:

  • in Bakersfield, 28% higher than the median home value;
  • in Fresno, 23% higher than the median home value; and
  • in Riverside, 8% higher than the median home value.

San Diego-area homes are on the border, with renters able to qualify for about the same valued home with their rent payment. For example, in Chula Vista, the average renter qualifies for a home 3% higher than the area’s median home value with the same rent payment.

Coastal metros see the exact opposite dynamic, as renters are able to get more house by remaining renters. Buying a home means sacrificing on space, location and amenities for the same rent payment. The average rent payment qualifies renters for homes:

  • in Anaheim, 4% less than the median home value;
  • in Santa Clara, 32% less than the median home value; and
  • in Santa Monica, 28% less than the median home value.

Also consider the fact that renters in these pricey coastal metros are regularly spending well over the recommended 31% of their monthly income on rent. In fact, the average Los Angeles renter spends 48% of their income on rent, compared to the average homeowner who spends 38% of their income on rent. This dynamic is similar in other coastal cities, but less so inland.

Since the average coastal renter spends more on their monthly rent than allowed by mortgage lenders, they would be unable to buy as much home as estimated by Zillow. Thus, renters are even less likely to buy in California’s pricey coastal metros.

As evidence, the breakeven horizon for how long a homeowner needs to own for it to make more financial sense than renting an equitable home is longest in these same cities. Renters will cash in from becoming homebuyers inland, but require a longer commitment on the coast.

And that doesn’t even touch the biggest obstacle to homeownership — the idea that most renters have access to a 20% down payment. Simply put, they don’t, and that fact throws off this entire analysis.

California’s low homeownership rate to continue

For California, all this means the state’s low homeownership rate will continue to plod along at or below its historical average of 55%.

California has the third-lowest homeownership rate in the nation, after New York and Nevada, as of the first quarter (Q1) of 2017. Currently, 55% of Californians own their home, compared to 64% nationwide.

Before the rent-buy dynamic shifts in California’s most expensive and desirable cities, more housing is needed to cool off high prices and rents.

Construction is slowly recovering in 2017, but at a snail’s pace. 12% more single family residential (SFR) construction permits were taken out in 2016 compared to the previous year. Conversely, 4% fewer multi-family construction permits were obtained in 2016 compared to the previous year. Meanwhile, residential vacancy rates remain at dire lows, and the population keeps on growing.

Once the ball gets rolling and more construction rises to meet rising demand, expect the homeownership rate to begin to rise. All of this activity will take time, and the next boom is anticipated around 2020-2021.