A new Pew Research Center analysis finds home prices have risen much faster than young adults’ incomes, creating even bigger hurdles for first-time buyers across California and much of the United States.
For many young Californians, owning a home is feeling less like the next step in adulthood and more like a distant goal.
A new analysis from the Pew Research Center finds that buying a home has become significantly less affordable for Americans under 40 in most U.S. metropolitan areas. The findings are especially relevant in California, where many cities already rank among the nation’s most expensive housing markets. The report arrives as high home prices, elevated mortgage rates, and the rising cost of living continue to squeeze first-time buyers.
For young families in Los Angeles and across California, the research reinforces what many have experienced firsthand: earning more money has not kept pace with the cost of buying a home.
The Pew Research Center analyzed government housing and income data covering 160 metropolitan areas.
Between 2019 and 2024:
- Inflation-adjusted median home values increased about 30%.
- Median household income for households headed by adults under 40 increased only 9%.
- The national home price-to-income ratio climbed from 2.9 to 3.5, approaching levels last seen during the housing bubble of the mid-2000s.
That growing gap means many young adults must devote a much larger share of their income to buying a home than previous generations.
The study also found that only 37% of renters under 40 earned enough income to afford monthly homeownership costs in 2024, down sharply from 56% in 2019.
California Faces Even Bigger Challenges
Although Pew’s report examines the nation as a whole, California illustrates many of the trends at their most extreme.
Communities across Los Angeles County, Orange County, the Inland Empire and the Bay Area have experienced years of rising home values, limited housing construction and fierce competition for available homes.
For many younger workers, even stable employment no longer guarantees they can save enough for a down payment while paying California rents.
Pew notes that a typical buyer using a low down-payment mortgage would have needed roughly $22,800 in cash for a median-priced home in 2024, compared with about $17,500 just five years earlier. That upfront cost alone has become a major barrier for first-time buyers.
Why This Matters for Latino Families
The findings have particular relevance for many Latino households in California.
Latinos are one of the state’s youngest and fastest-growing populations. Many are entering their prime homebuying years while facing higher housing costs than previous generations.
Homeownership has historically been one of the primary ways American families build long-term wealth, create financial stability, and pass assets to future generations. When buying becomes more difficult, families may remain renters longer, delay building equity, or postpone other financial goals.
The study does not conclude that Latino households are uniquely affected, but California’s demographic trends mean many Latino families are among those navigating today’s more difficult housing market.
Pew Research Center says it wanted to measure affordability using more than home prices alone.
Instead of looking only at rising housing values, researchers compared local home prices with local household incomes for people under 40.
That approach provides a more realistic picture of affordability because it reflects whether wages are keeping pace with housing costs rather than examining prices in isolation.
Housing affordability remains one of California’s biggest economic and political challenges.
State leaders continue debating policies aimed at increasing housing production, streamlining construction approvals and expanding opportunities for first-time buyers. Mortgage rates, inflation and future wage growth will also influence whether affordability improves.
Recent national housing indicators suggest affordability has shown modest improvement compared with last year as wages have risen and mortgage rates eased slightly. However, many buyers still report that ownership remains financially out of reach because prices remain historically high.
For young Californians hoping to buy their first home, the latest Pew findings suggest the challenge is not simply perception. In most of the country, including many California communities, housing has become objectively less affordable over the past five years.
Facts
- Rising home prices continue to outpace income growth.
- California remains one of the most difficult places for first-time buyers.
- Larger down payments and higher monthly costs are delaying homeownership for many young families.
- Policymakers, lenders and local governments will face increasing pressure to improve housing affordability.
