How can California improve its lowly homeownership rate? Maybe build fewer apartments.

That’s a novel conclusion I drew from my trusty spreadsheet’s look at homeownership stats weighed against building permits data dating back to 1988 for the 50 states.

The math shows that residential construction is more heavily focused on single-family housing in the states with the highest homeownership rates. “Build it and they will buy” might be the operating philosophy.

But these same stats also suggest that when the public is offered ample rental options – noting the elevated multifamily-building permits in many low-ownership states – being a tenant becomes a popular choice. (Hey, somehow I survived my upbringing in a New York City rental.)

The nation has spent huge efforts – and gobs of taxpayer dollars – boosting the “American Dream” of homeownership in recent decades. The results have been lackluster, at best, and awkwardly painful in California. Ownership is largely stagnant as costs go through the roof, to use a bad pun.

Is it time to reprioritize housing policies and put renting on a relatively equal standing with ownership?

Meek improvements

Homeownership stats from the Census Bureau show California is a prime example of what didn’t work.

An average 55% of its households live in a home they own in 2022 through 2024. Only New York, at 53%, had less ownership. After California, Hawaii was at 60% and Nevada at 61%.

Nationally, 69% own their residence. Tops? West Virginia at 78%, then Delaware, Mississippi, and Maine at 75%.

Nothing much has changed in the Golden State, rankings-wise, look back to 1988-1990. Back then, California also suffered the second-lowest ownership at 54%. Again, it was just ahead of New York at 52%. By the way, California ownership peaked in bubble-fueled 2006 at 60%.

Nationally, ownership was 67% in 1988-90, topped by Maine, West Virginia, Pennsylvania and Michigan at 73%.

Contrast these two periods separated by almost four decades. Despite relentless nudges to boost ownership, the share of Californians residing in a place they own grew by only 1.5 percentage points.

To be fair, that was the 29th-best performance nationally. It’s a noteworthy middle-of-the-pack ranking for California’s otherwise bottom-of-the-barrel ownership levels.

Nationally, ownership is up 1.8 percentage points over 37 years. Where did ownership balloon? Colorado is up 7.5 percentage points to 66.8%, New Hampshire, up 7.3 points to 73.9%, and Alaska, up 7.2 points to 65.2%.

High vs. low

Ponder what you discover when you split the states into three groups based on their 2022-24 ownership rankings.

The 17 states with the highest ownership have an average 73% of residents living in their own homes vs. 62% for the 17 low ownership states, which includes California.

That’s a significant gap that’s grown over four decades: The owners’ share in high ownership states increased by 4 percentage points from 69% in 1988-90. The low ownership states saw just a 2-point increase from 60%.

This ownership gap can be linked to what kind of housing has been developed since 1988.

High ownership states had 7.3 million permits pulled for houses vs. 2 million units for multifamily housing. That’s means 78% of new residences in these states were targeted for owners.

Contrast those numbers with low ownership states. Over 37 years, they had 15.3 million single-family permits vs. 7.4 million multifamily units. So, only 67% of residential construction was aimed at owners.

You can argue that low ownership states are just more renter friendly.

How much?

There’s only one place outside of California where you’ll spend more of your paycheck on housing.

My trusty spreadsheet adjusted a housing cost study from WalletHub with homeownership levels to calculate how much typical households spend on housing expenses.

Putting a roof over one’s head eats up 44% of a typical California household budget. Only Hawaii at 53% was higher. The national median was 26%. Iowans spend the smallest share at 19%.

California homeowners have the nation’s second-highest financial burden, spending 46% of their incomes on the place they own. Only Hawaii at 53% is higher. The typical American homeowners spend 26% of their income on their house. Lowest, again, is Iowa at 19%.

Now California tenants fare a tad better in WalletHub rent rankings, with the nation’s sixth-highest burden at 42% of their income going to the landlord.

Topping the Golden State are New York at 55%, Hawaii at 53%, Massachusetts at 49%, Florida at 43%, and Maine at 42%. Nationally, tenants put 28% toward rental expenses. Folks in Kansas and Iowa spend the least at 19%.

Urban twist

Don’t overlook geography: Big city bustle vs. countryside charm.

So, contemplate Census Bureau data that slices residency as either urban or rural.

California, Nevada and New Jersey top the urban rankings with 94% of their populations in “big city” areas. They rank in the bottom six for homeownership.

And the least urban? Vermont at 35%, Maine at 39%, and West Virginia at 45%. They rank in the top eight for ownership.

See it this way: The high ownership states average 63% of their population in urban settings. It’s 82% for low ownership spots.

Remember, apartment developers love densely populated, big city regions.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com