The Challenges of Buying Your First Home in California as a Millennial

California Ranked as Toughest State for Millennial First-Time Home Buyers

If you’re a millennial living in California, buying your first home doesn’t come any harder. According to a recent report by Claes Bell, an analyst with Bankrate.com, California ranked as the toughest state in the nation for first-time home buyers, particularly those in the millennial age bracket of 18 to 34.

One of the key reasons for California’s ranking is the high cost of housing. The median home price for new and resale homes in Southern California hit $460,000 in February, up 7% from a year earlier. This, coupled with the tight market for available entry-level homes and the struggle millennials face in saving for a down payment, makes it challenging for young buyers to enter the market.

Bell explained that California consumes one of the highest percentages of people’s income for housing, making it difficult for individuals in the typical first-time home buyer age range to afford a California-sized mortgage payment. In fact, the average housing costs in California consume 35.2% of gross income, compared to the national average of 19.4%.

Additionally, home builders in California are not keeping up with the demand for homes, leading to a shortage of affordable housing options. This lack of supply, combined with the rising cost of renting, prevents many millennials from saving for a down payment and traps them in the rental market for longer periods.

Despite these challenges, there is hope for first-time home buyers in California. Bell suggested looking into FHA loans, which allow buyers to purchase a home with as little as 3.5% down, as well as exploring local first-time home buyer assistance programs. These programs may offer down-payment assistance or other forms of financial support to help young buyers enter the market.

While saving money remains a significant obstacle for many millennials looking to buy their first home, exploring these options and seeking assistance from local programs could make homeownership a reality for more young Californians.