Over the past decade, the dream of homeownership became more elusive than ever as soaring home prices eroded any headway aspiring San Diego buyers made following the Great Recession.
By 2020, the proportion of households owning a home had fallen from 54.4 percent 10 years earlier to 53.5 percent — the lowest decennial rate in four decades.
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Newly released 2020 data from the U.S. Census paints a picture of members of San Diego households — be they young or middle-aged, White, Black or Hispanic — losing ground in the quest to buy a home. While the overall homeownership rate fell by a percentage point, that modest decline masks the much larger drops among nearly all age groups in the county.
The only notable exceptions to the downward trend were in the Asian population — where the overall proportion of households owning homes grew by nearly 3 percentage points — and the county’s oldest residents, age 75 and older, who saw their homeownership rate rise by more than 2 percentage points.
By contrast, the drops among all other adult age groups ranged from 2 percentage points to as high as 5 — for those age 45 to 54.
“It all comes back to housing prices. The American dream is going great for people over 65 but it’s eroding more for the bottom up,” said Dowell Myers, a professor of policy, planning and demography at USC. “The losses are rising steadily from the bottom and that’s not good. You’re building more of the population on the lower trajectories of homeownership and they’re never going to bounce back up to the top.
“You still have a lot of older people who push the average up, but with each decade there’s no one at the bottom with success. It’s an inexorable decline.”
The change in homeownership came amid a decade when interest rates remained at historic lows and the county’s housing prices rose in fits and starts but eventually reached a near-record high of $594,500 in April of 2020 — more than 80 percent higher than at the start of the decade.
In April 2010, the start of the census period, the price for a resale single-family home was up 11.6 percent in a year as it climbed out of a nearly 30 percent drop during the Great Recession, according to the S&P Case-Shiller Indices. After a few subsequent dips, the market seemed to stabilize in 2015 when prices were increasing from around 6 to 8 percent a year for the next few years.
The Census Bureau’s 2020 data, of course, doesn’t capture the more recent, historic climb during the pandemic when housing costs soared even more. By May of 2022, the overall median price of a home had risen roughly 20 percent in a year to $805,000. At the same time, interest rates had started rising rapidly as part of the Federal Reserve’s effort to tamp down inflation. The current 30-year fixed-rate mortgage has doubled in the last three years to 6.57 percent, which further exacerbates affordability woes for aspiring buyers.
“If we looked at numbers up until May 2022, I think you would see the homeownership rates even lower,” said Alan Gin, an economist at the University of San Diego.
He noted that a typical young San Diego worker has always had trouble affording a home but the rapid increase makes it nearly impossible for wages to keep up.
The latest census release, while it remains the single most accurate source of homeownership trends, was delayed by about two years because of difficulties during the pandemic gathering information and efforts by the Census Bureau to implement a new system for protecting the privacy of respondents.
More recent data from an annual survey conducted by the Census Bureau for the 75 largest metro areas shows the proportion of San Diego homeowners rising throughout much of the decade but then beginning to fall by 2021 and 2022.
While it is clearly affordability that is driving much of the downward trend, San Diego demographer John Weeks points out that there are other complicating factors, including an aging population that is loathe to part with their homes, which tends to depress the inventory of properties for sale.
The share of San Diego’s population that was 60 and older accounted for 27.5 percent in 2010. Ten years later, its share had jumped to nearly 34 percent.
“The older population has higher homeownership rates than the younger population, so given the size of the baby boom generation and the fact they’re buying homes, holding onto them and living longer than before, there isn’t as much turnover in the market as there had been in the past,” said Weeks, director of the International Population Center.
It would be wrong, say demographers, to explain the stalled growth in homeownership for younger age groups by looking just at the span of time between 2010 and 2020.
“These groups are seeing their homeownership decline because of San Diego being expensive in 2005, not just in 2020,” said Issi Romem, an economist with MetroSight, a Bay area economic research firm. He is also a former fellow at UC Berkeley Terner Center, which recently examined what it calls California’s “sliding homeownership ladder.” Like San Diego, California also saw its proportion of homeowners fall in 2020 — by 1.5 percentage points to 54.5 percent. Among the 50 states, it had the second lowest homeownership rate, just behind New York.
“There are two dimensions to the story. One is that those people who choose to live in San Diego are having a harder time transitioning into homeownership or retaining homeownership,” Romem said. “But there are also fewer people in these younger age groups moving into San Diego in the first place, so the affordability woes in San Diego are both making it harder to become a homeowner and also turning people away, whether it’s people leaving or people not moving there who would have otherwise if the price was more affordable.”
That explains why inland, less costly counties like Riverside and San Bernardino have had traditionally much higher homeownership rates, and 2020 is no exception. While their proportion of homeowners also slipped in the last decade, Riverside, for example, still had a rate that was 13 percentage points higher than San Diego County’s. Its 2020 rate was 66.6 percent, down from 67.4 percent a decade earlier.
Long a magnet for those in search of affordable homes to buy, Riverside saw 13,000 more people from other parts of the U.S. move into its county than leave between 2020 and 2022. San Diego had a net exodus of more than 18,000 during that same time frame.
Homeownership matters, USC’s Myers says, because it has traditionally been the primary avenue for acquiring wealth for the middle class. What especially troubles him and other demographers is the still yawning gap in homeownership rates between the White population and Hispanic and Black populations The 2020 census count shows a 21 percentage-point difference between the White and Latino populations. For the Black population, the chasm is even wider — 30 percentage points.
Asian homeowners remain the outlier as they rapidly gain ground in closing the gap between their share of homeowners — 58.4 percent in 2020 — and that of non-Hispanic White people — 61.3 percent. Less than 3 percentage points separate the two racial groups while 10 years earlier, it was a 6 percentage-point difference.
Jahara, 37, and Justin Peters, 35, were a statistically rare example of young homeowners in 2020 when they bought a single-family home in San Diego County. Both nurses by trade, they benefited from Jahara Peters’ four-year journey to become debt-free. They might also have benefited from her background as a Filipina American.
Jahara said that in 2016 she was like a lot of people her age, saddled with student loan debt, but she became determined to pay it off. She changed a lot of her spending habits and, most importantly, lived with an aunt for several years to save money.
“I had the support of my family,” she said. “With Filipinos, it’s part of the culture, it’s OK to live with your family if you aren’t married and don’t have kids. Families living together is normal and you don’t have to make it on your own.”
She and her husband, who is White with Puerto Rican heritage, married in February 2020 and quickly decided during their COVID-19 quarantine days that a one-bedroom apartment in downtown San Diego was too small for them.
The couple had managed to save up enough after paying off their debt to come up with a down payment for a four-bedroom house in Spring Valley that they purchased for $650,000.
Several years later, they say they are grateful they purchased when they did. Jahara estimates their $3,000 monthly payment is less than what many of her friends are paying for rent.
It’s not surprising to see the rapid gains made by the Asian community given the high priority it places on creating wealth, says Hope Atuel, CEO of the San Diego-based Asian Real Estate Association of America. Homeownership, she said, is one way to do that. It’s not that Asian families want to accumulate money for the sake of being rich, but rather, they are planning to have enough money to send their children to college.
“It’s not even a question or not if they will go to college,” Atuel said of adult children graduating high school.
The glacial change in homeownership for the Hispanic community should not be a concern just for the Latino population, says Myers. As long as their ability to buy homes is tamped down it will have a ripple effect throughout the county, as the Hispanic share of the overall population continues to rise, says Myers.
“You’ll have a lot of Whites in the next decade who will be wanting to sell, and the biggest part of that market will be young Latinos who don’t have all the resources to pay a million dollars for a house,” he said. “We need them to be college-educated, so they can become big home buyers. I’ve been trying to sound the alarm on this for 15 years.”
The affordability challenge for minority populations has a lot to do with income disparity. Census data between 2015 and 2019 show that the median income for White residents in San Diego was $100,000 compared to $65,000 for Hispanic people and $61,000 for Black people.
Mauricio “Mo” Perez, a board member on the National Association of Hispanic Real Estate Professionals, said the start of the decade was especially difficult for Latino homeowners, many of whom lost their homes to foreclosure during the recession. While the 2010 to 2020 time period essentially showed Latino homeownership unchanged at 40 percent, Perez said that doesn’t tell the whole story.
His association’s recent “State of Hispanic Homeownership” report — using a mix of data sources and Latino homebuyer surveys — said the national Latino homeownership rate was 48.6 percent in 2022 after steady increases from 2015 onward.
Still, Perez said the Latino population faces challenges like not having a credit history that’s needed to apply for a mortgage. On top of that, many of his Latino clients in San Diego County use first-time home buyer programs that frequently don’t work for buying condos or townhouses.
Al Abdallah, president of the Urban League of San Diego County, said Black residents have been challenged by a history of redlining and discrimination in lending practices. That, in turn, has impeded efforts to build generational wealth, which is a major hindrance to being able to make down payments.
“Down payment assistance is really what gets people across the finish line,” Abdallah said.
The California Housing Finance Agency said the statewide Black homeownership rate — 35 percent in the 2020 census — was lower than it was in 1960 when it was 42.4 percent. As part of an effort to correct this, its Building Black Wealth initiative, which launched in February 2021, provides free housing counseling and pathways to down payment assistance.
Abdallah said it’s tough for any age group to get into a home in San Diego when rents are so high. Unlike the median home price during the census period, which went up and down, rents climbed the entire time and they continue to rise.
“How do you save money for a down payment if you pay $3,000 a month in rent?” Abdallah said.
Real estate agent Jan Ryan has seen a lot of changes over four decades working with residential buyers in San Diego County. Ryan got her broker license in 1981 and can recall young families buying into their first home and starting a life through most of her career. That has largely changed in the last few years.
Younger buyers are now facing heightened competition — from investors looking to rent out purchased homes to transplants from the San Francisco Bay Area and older San Diegans with much more money to spend. Ryan said young buyers are constantly outbid or not even trying.
Compounding the problem, she says, is a slowdown in home construction. In 2004, there were 17,306 residential units built in San Diego County. Over the last five years, the annual average has been a little over half that — 9,390.
Ryan wonders how most young people will ever be able to afford a home in pricey San Diego. She says she’s seen young families saddled with monthly mortgage payments of $5,000, on top of property taxes and insurance.
“It just breaks my heart,” she said.
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