As the share of entry-level homes continues to shrink and interest rates oscillate, renters are faced with an uncertain future and limited possibilities in their transition to homeownership and California first-time buyers know this better than most, according to a new report.
With core metropolitan cities no longer an option for first-time buyers, Point2 reviewed data on starter homes in the country’s 100 largest secondary markets. To determine which non-core cities in California provide the best chance at owning an entry-level home, the study analyzed the median price of a starter home and the renter household median income.
Some of the findings for California:
- First-time buyers face median prices on entry-level homes ranging from less than $355,000 in Victorville to nearly $953,000 in Fremont.
- Although still far from comfortably affording a starter home, renters in Clovis and Fairfield are the closest to transitioning toward homeownership: They are 42% short, which translates into income differences of $38,965 and $48,888, respectively.
- Of the country’s 100 largest secondary markets, 39 are in California. Renters in 33 of them earn half or less than half the income required to cover the mortgage on a starter home
- The road to homeownership is the toughest in secondary markets within the Los Angeles and San Diego metros, according to the latest renter income figures, starter home prices and mortgage rates.
Nationwide, the share of starter homes built has been cut in half since the beginning of the century — from 13% in 2001 to a meager 7% in 2021, according to the report.