The Public Policy Institute of California revealed in a Feb. 27 report that 44 percent of homes in the Golden State are occupied by renters, compared with 35 percent in the United States, according to the U.S. Census. New York topped California by 2 percentage points.
Although the trend isn’t a new one, researchers wrote, increasing home prices certainly haven’t helped.
To no surprise, more renters were found in the dense urban cores of Los Angeles and San Francisco counties, exceeding the number of homeowners. Researchers also found renters are generally younger and more likely to be Black or Latino, compared with homeowners, and less likely to have a college degree.
The data list several categories comparing renters and homeowners, revealing that 70 percent of homeowners are U.S. born, about half are white and about half are males, and two-thirds are ages 25 to 64.
Historically California renters have earned higher wages than in the rest of the country, researchers found, noting that they earned 13 percent more in 1980, but 40 percent more by 2022. At present, one-third of renters in the state earn more than $100,000 a year, which is nearly double that of the rest of the country.
But higher-earning renters create problems for those lower on the income scale.
“Ironically, these higher-income renters help drive up rental costs for lower-income renters, who are more likely to struggle with the higher costs,” the report reads.
Other findings using the Census Bureau’s latest Pulse survey data showed most renters in the state spend half of their income on rent, trailing only Florida and Louisiana renters for the most in the nation. The data also showed at least 1 million people are behind on rent and 150,000 expect eviction soon.
The average renter in the state earns about $65,000, according to the report, which also measured “renter stress” based on income. Areas with higher income such as San Francisco had less renter stress than low-income areas, researchers found, because more options are available to higher wage earners.
“Renter stress is really about options, and higher-income residents have more of them. A high-income person who spends too much on rent can usually move to a lower-cost unit,” researchers wrote.
As an example, a middle-class person living in San Francisco’s Bay Area could move to the Central Valley—exchanging lower rent for a longer commute—but someone with low income who depends on public transport and has less money to move has less wiggle room, they said.
Recent legislation in California looks to keep corporate investors from turning single-family homes into rentals, with Assembly Bill 2584 proposed earlier this month, which would prevent investors with more than 1,000 single-family homes from purchasing more of such properties for rental conversions.
“Corporations are buying up whole neighborhoods’ worth of housing inventory,” Assemblyman Alex Lee, a San Jose Democrat, said in a Feb. 14 press release.
