How do home prices shake out across California’s varied regions? The answer has a lot to do with the workers who live there.

Nationally, 59% of the population is of working age, or between the ages of 20 and 65. This percentage varies greatly by region, and the difference corresponds closely with home values.

The higher the share of working-age individuals, the higher home prices tend to rise, according to a recent Trulia analysis.

For a prime example, look no further than San Francisco, where the share of working-age population is the third-highest in the nation, at nearly 70% — only 15% of residents are of retirement age. The median home price here is nearly $1.4 million as of mid-2018, according to Trulia.

On the other hand, counties with large retired populations see lower home prices. In California, this is exemplified in Mariposa County, home of Yosemite and just north of Fresno. Here, the working-age population is just 55% of the total population — 27% are of retirement age — and the median home value is $232,000.

The correlation between home values and the age of residents is a chicken-and-egg situation, where no single factor comes first, but is due to a number of interwoven factors, including:

  1. Workers tend to concentrate in areas with access to high-paying jobs.
  2. High-paying jobs qualify residents for high home prices.
  3. Areas where demand is high due to desirable jobs tend to have tighter zoning restrictions, meaning less residential construction takes place.
  4. Areas with low construction and high demand fail to keep up with rising population numbers, escalating home prices and rents.

At the other end of the spectrum, retirees seek out low-cost areas in order to stretch their retirement funds furthest. In the case of San Francisco, retiring homeowners will likely choose to cash in on their home sale and take their money elsewhere. After all, they don’t require the quick access to jobs now that they are no longer working.

Nearby Sacramento and Monterey are destinations for Bay Area retirees. Or, for those looking to stretch their retirement dollars even further, sunny Arizona and Nevada — and even Mexico — receive many of our state’s retirees.

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Boomers retire and California trembles

Retirees set to shift California’s housing landscape

In 2018, California’s retiree population is growing — quickly. Retiring Baby Boomers are listing their homes in preparation for their job-free years, and the implications for real estate are huge.

Baby Boomers are the largest home-owning generation in U.S. history. In California, three-out-of-four members of this generation are currently homeowners, according to the U.S. Census.

Most of these Baby Boomers will remain homeowners in retirement, but on a smaller scale. It’s common for retirees to trade in their large, maintenance-heavy suburban homes for smaller, more manageable homes closer to family members and amenities.

Further, the lure of today’s high home prices entices many Baby Boomers approaching retirement to sell their current home and set aside the excess cash for retirement. This additional cash will be helpful to Baby Boomers whose retirement savings were hard-hit by the 2008 recession.

For real estate agents, expect more and more of your Baby Boomer clients to hit the market in the coming years. Finding out their wants and needs will prepare you to obtain more listings and repeat buyers from this generation. Alternatively, for agents in high-cost areas of the state, obtaining connections with brokers in low-cost regions may benefit you in the form of referrals when your retiring clients sell and move to more retirement-friendly areas of the state or country.