Did coronavirus widen Southern California’s homeownership divide?

July 28, 2020

The coronavirus pandemic may have ballooned Southern California homeownership’s geographic divide to a level not seen in 16 or more years.

New Census Bureau stats on who owns the home they live in shows ownership at a 12-year high in the Inland Empire while still running at a national low in Los Angeles and Orange counties.

 

In Riverside and San Bernardino counties, 67.8% of households lived in a residence they owned in the second quarter — highest since 2008’s second quarter. While that ranked No. 43 among the 75 big metropolitan areas tracked by the bureau, it was up sharply from 62% in 2020’s first quarter and 62.6% a year earlier.

 

Meanwhile, in Los Angeles and Orange counties, renters still dominate. Only 48.3% of households lived in a residence they owned in the April-to-June period. That’s the third-straight quarter L.A.-O.C. has been the nation’s low for ownership as the rate fell from 48.8% in the previous quarter but is up from 46.5% a year earlier.

 

Now, these are uncommon times. The Census Bureau notes that the pandemic stopped its in-person interviews for data collection, which raises questions about the data’s accuracy — especially since ownership has been historically lower for data collected through in-person chats.

 

Data caveat aside, these are also uncommon times with a very split business climate.

 

Workers with “essential” jobs or ones that can be done from home — and these are typically better-paid positions — have largely stayed employed. These folks have seen historically low mortgage rates — used to keep the economy afloat amid a recession — as an opportunity to become homebuyers.

 

Conversely, the split economic impact of the pandemic’s business limitations means many low-income workers who are typically renters have lost their jobs.

 

The long-running ownership gap between these two Southern California markets can be largely tied to housing costs. The far pricier L.A.-O.C. rate has trailed Inland Empire ownership by an average 12 percentage points since 2005. The current gap of 19.5 points is tied for the widest difference in the past 16 years.

 

Homebuying stats from DQNews show the growing popularity of Inland Empire ownership. In the second quarter, Riverside and San Bernardino counties accounted for 44% of closed home sales in the four-county region compared with a 38% share during the previous five years.

 

Let’s also note that swings in the ownership rate don’t just result from more homebuying.

 

In the coronavirus crisis, financially strapped tenants may have chosen to move out of their rentals and double up elsewhere as “stay at home” orders battered the economy and drove unemployment to historic highs. This was a trend seen during the Great Recession, the last economic downturn.

 

And while many rental evictions have been limited by legal moratoriums, homeowners short of cash have gotten far more generous “forbearance” offers from their lenders. These generous payment postponements, created after significant pressure from various government officials, keeps many cash-short owners in their homes, for now.

 

Yes, the bureau found ownership rate grew nationally, too. The second quarter’s U.S. rate of 67.9% — highest since 2008 — outpaced 65.3% in the previous quarter and 64.1% a year earlier. Cape Coral, Fla., had the nation’s highest ownership rate at 82.5%.

 

California ownership improved, too, although the state ranked next to last nationally. Delaware had the highest ownership at 81.3% while New York was lowest at 54.4%.

 

In the second quarter, 56.4% of California households lived in a residence they owned — the highest rate since the first quarter of 2010. It’s up from 54.4% in the previous quarter and 53.2% a year earlier.

 

A look at other California metros tracked shows Sacramento with a huge ownership gain, perhaps benefitting from a flight of Bay Area workers inland. Its 64.8% rate (No. 52 among the 75 metros) was up from 59% in the previous quarter. But nearby Fresno did not benefit from such a trend as ownership fell: 56% (No. 71) vs. 56.8% in the previous quarter.

 

San Jose-Santa Clara ownership dipped to 49.3% (No. 74) vs. 53.1% in previous quarter, yet San Francisco’s rose to 56% (No. 71) vs. 51.2% in previous quarter. Meanwhile, San Diego saw little change as its 56.5% rate (No. 70) was off slightly from 57% in the previous quarter.

 

via OC Register

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