The state that left millennials behind

• Homeownership in California is increasingly out of reach for many, especially millennials.
• Since 1980, Californians ages 25 to 45 have seen their homeownership rates decline.

Millennials might be stuck California dreaming — and not able to do much more than fantasize.

In the Golden State, homeownership is becoming more elusive, especially for millennials. Millennials — who are roughly ages 27 to 42 — are struggling to buy in California now more than ever, according to a paper from the Terner Center for Housing Innovation at UC Berkeley.

Homeownership rates for Californians ages 25 to 45 have fallen the most of any age group from 1980 to 2020, per the study. The elder half of that group, Californians ages 35 to 45, saw their homeownership rate plunge from 64.4% in 1980 to 39.7% in 2020; the younger cohort, those who are 25 to 35, saw their homeownership rate plunge from 39.4% to 15.5%.

Potential homeowners in California are increasingly falling behind the rest of the nation because of just how unaffordable housing has become. That's a trend that's been worsening over the last few decades and has become particularly stark over the last 40 or so years. About half of the state's declining homeownership rate could have been prevented if housing prices in California had stayed in line with the rest of the country from 2000 to 2021, according to the study.

Californians of every age lag behind the rest of the country when it comes to being able to afford a house or own one outright without a mortgage. About 46% of people ages 35 to 45 in the rest of the country are financially able to own a home, according to the study's analysis of the 2021 Survey of Income and Program Participation. In California, just about 38% of people ages 35 to 45 can say the same.

That's even as Californians grow richer, and earn more than workers in many states.

The average age of a US homebuyer in 2021 was 33, according to the National Association of Realtors; in 2023, it was 35. In California, it's at age 49 that over half of residents are homeowners, per the study.

That's not to say that millennials outside California are experiencing completely smooth sailing. It's a tough market for the cohort, who really, really want to buy houses, but are seeing lower net worths than other generations did at the same life stage, higher debt, and tight housing supply.

Even so, some millennials are succeeding in buying houses. A RentCafe analysis found that just over half of millennials now own, not rent. And the places that are best for younger homeowners to buy are conspicuously not in places like California or New York; instead, as Business Insider's Kelsey Neubauer previously reported, first-time home buyers might instead want to flock to the Midwest, Southwest, or Southeast.

Millennials might be fleeing to do just that. The typical person moving out of California is a millennial or Gen Zer heading towards states like Texas, Arizona, and Florida, as Business Insider's Noah Sheidlower previously reported. The majority of those movers are employed, making an average of $53,566 annually. They might get more bang for their buck elsewhere: In California, the median home value was $715,900 as of 2022, compared to $275,400 in Texas, according to the Census Bureau's American Community Survey. And as California's population declines, Texas's has picked up — showing that the American dream for those younger movers might be in reach somewhere where housing is more affordable.

Are you a millennial dealing with unaffordable housing costs or moving to improve your chances of homeownership? Contact this reporter at jkaplan@insider.com.