More Bay Area millennials are becoming homeowners, and they’re doing so at a faster pace than others in their age group nationwide. Yet the region still has some of the lowest homeownership rates among this generation, with most continuing to rent.
The San Francisco and San Jose greater metro areas, which together cover the Peninsula, are seeing significant gains in homeownership among buyers born roughly between 1981 and 1996. The San Francisco metro area, which includes San Mateo County on the Midpeninsula, as well as Alameda, Contra Costa,, Marin and San Francisco counties, saw its homeownership rate among the generation grow 88% from 2018 to 2023, compared with 74% nationally, according to a new analysis by online property management platform RentCafe. The San Jose metro area, which includes Santa Clara and San Benito counties, matched the national growth rate at 74%.
Even with that growth, only 37.6% of San Francisco-area millennials and 34.2% of those in the San Jose metro owned their homes in 2023. San Jose had the second-lowest homeownership rate among this generation across the 107 metro areas analyzed, ahead of only Los Angeles, while San Francisco ranked fifth-lowest.
That puts the two Bay Area metros well behind the national trend. According to the study, millennials have become a homeowner-majority generation, with 82 of the 107 metro areas reporting more Millennial homeowners than renters.
San Jose and San Francisco also remain among the metros with the highest concentrations of Millennial renters, alongside Los Angeles and New York, according to RentCafe. The analysis points to high home prices and limited housing supply as factors that continue to make buying difficult, even as incomes have risen.
Homeownership is rising despite high costs
RentCafe’s analysis found that some of the biggest gains in Millennial homeownership occurred in smaller and midsize metros in Florida and California. In California, Bakersfield, Stockton, Riverside and Sacramento were the only metros among the 107 analyzed where millennials had reached a homeowner majority.
The Bay Area’s gains stand out because they occurred despite its high housing costs. San Francisco’s share of Millennial homeowners rose 13 percentage points over five years, while San Jose’s rose 9 percentage points.
On the Peninsula, meanwhile, affordability has improved or held steady over the past year, even though home prices remain among the highest in the state, according to the latest data released from the California Association of Realtors. In the second quarter of this year, 22% of households in Santa Clara County could afford a median-priced home, up from 18% a year earlier. San Mateo County remained at 18%. The median home price was above $2 million in both counties. By comparison, 19% of California households could afford a median-priced home.
Even with those affordability gains, Millennial homeownership remains below 40% in both metro areas.
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