California’s young adults contend with numerous obstacles on the road to homeownership specific to this generation. Nationwide, today’s young adult population moves more frequently than previous generations. But in California, several forces are influencing young adults to stay put.
45% of U.S. adults aged 25-34 years have moved within the past two years as of 2017, according a recent Zillow analysis. This is up significantly from 39% in 1970 when the first of the Baby Boomers were leaving the nest and forming households.
Though turnover has increased across all age groups since 1970, it also tends to decrease with age. Older adults have put down roots, are settled in their careers and are often raising families. Whereas, young adults are still finding their careers and have fewer obligations and experiences to tether them to any one place.
Further, today’s young adults generally tend to be more mobile than previous generations, as they carry more student debt and thus delay purchasing a home. They also entered their careers late following the 2008 recession, causing them to put off saving, household formation and homeownership.
While U.S. trends for young adult mobility are clearly up over the past few decades, the same is not true here in California.
The share of young adults who have moved within the previous two years was:
- 44% in Los Angeles in 2017, down from 47% in 1970;
- 41% in Riverside in 2017, down from 47% in 1970;
- 48% in Sacramento in 2017, down from 47% in 1970;
- 51% in San Diego in 2017, down from 55% in 1970;
- 46% in San Francisco in 2017, down from 49% in 1970; and
- 52% in San Jose in 2017, up from 45% in 1970.
For every major California city — with the exception of San Jose — turnover has decreased for today’s young adults compared to their parents’ generation. Why has this decrease occurred in California, while most of the U.S. has seen increased turnover?
California’s turnover issue
While turnover has historically been higher here in California, recent years have seen turnover decline below the U.S. average. For example, in 2017:
- 7.5% of California homeowners moved, compared to 8.0% of the U.S. homeowner population; and
- 18.3% of California renters moved, compared to 24.2% of the U.S. renter population.
Today’s below average turnover rates are directly tied to the state’s high housing costs.
Turnover is historically highest when homebuyers and renters have confidence in the economy and employment — this is when they are most willing to move. But to have the ability to move, home prices and rents need to be within reach of incomes. This means housing costs cannot exceed the pace of income increases.
In California, housing costs vastly outperform incomes. The result is that fewer young adults are able to scrounge together a down payment, or sometimes even the requisite security deposit and first month’s rent needed to change rentals.
The solution lies in more residential construction. The past several decades have seen construction fall below population growth, which has caused rental and housing vacancies to decline below healthy levels, resulting in a supply-and-demand imbalance.
Legislators can help by adjusting zoning and increasing builder incentives. Some of these changes are already underway at the state house, but the work needs to continue.