More households are occupying California today than in 2000, but the increase has not been a steady upward march for owners and renters alike. Within that increase of 19.1% more California households in 2023 compared to 2000, homeowner growth has caught up to and surpassed the growth of renters. About 15.7% more households rent in California compared to the year 2000; however, homeowner households increased 17% during that same time.
During the Millennium Boom, owner household formations outpaced new renter households significantly. That pattern reversed after the 2008 recession. However, as the recovery gained steam, ownership growth crossed over in 2021 as a result of the post-pandemic-era buying spree.
As we look ahead, expect to see another slowdown in household formations similar to 2006-2009. The current real estate recession has homebuyers hesitant to make big changes. Their concerns over trade taxes, unstable federal governance, and high mortgage rates are reasonable and causing them to sit out until prices bottom and show signs of recovering.
Meanwhile, a growing number of households are consolidating, many moving in with roommates and family members. Don’t expect to see household formations pick up until the next recovery, expected to begin after 2028.
Updated September 2, 2025.
Chart update 8/25/25
20232000Percent change: 2000-2018Total households13,699,80011,502,90019.1%Homeowner households7,658,500
6,546,300
17.0%5,735,5504,956,50015.7%
While household formations continue to rise at a steady clip, significant trends have taken shape. About 15.7% more households rent today than in 2000, whereas 17% more households are owner-occupied.
During the Millennium Boom, homeowner formations increased more quickly than renters, due to the allure of easy financing and instant wealth from rising home values. However, the trend reversed by 2010. Today, growth in renter households was again eclipsed by the growth of homeowner households.
Sensibly, the trend of fewer tenants moving into multi-family units would reverse in a normal housing market, with a greater share of new renters moving into multi-family units and a smaller share moving into SFR rentals. However, the recent trend is a reflection of the mass of foreclosures in 2007-2013. Many SFRs lost to foreclosure were converted into rentals, directly or indirectly, for those same foreclosed-upon families to occupy as tenants.
On the other hand, recent college graduates or those moving out of the nest for the first time make up a significant portion of new renter households moving into multi-family units. This generation — Gen Z and their older counterparts, Millennials — will spend more of their lives as tenants than did their parents’ generation.
Most Millennial households are now forced to delay homeownership, if not indefinitely. Currently, the homeownership rate for individuals aged 25-29 in California is 33.5% and ages 30-34 down to 47.4%. From the height of the Millennium Boom this represents a decline of 20% and 15% respectively.
That’s because young adults were hit by the 2008 recession just as they were gaining a foothold in their careers. Further, just as the employment market officially recovered in 2019, the 2020 recession arrived. Gen Z and Millennials’ income has been stunted irreparably and their attitudes about ownership have been damaged by the Great Recession and the Covid lockdown.
This means first-time homebuyers will save for down payments over a longer time period. This process has not even begun for a significant portion of this demographic, as residential rents have increased much faster than incomes, making saving difficult. In some parts of the state, it’s common for renters to pour half of their income into rent.
But if you look far enough, there is a bright spot on the horizon. Once Millennials make a solid showing in the jobs market and their savings accumulate sufficiently, Millennials’ massive population bulge will give California’s low-tier to mid-tier housing market a boost. This wave of first-time homebuyers are expected to enter the housing market in the years following the current recession, say, 2028.
At the same time, Baby Boomers will be retiring and looking for replacement homes. All of this activity will result in the Great Confluence of homebuyers, increasing both home sales volume and prices as we head into the next decade.
In the meantime, use marketing materials that speak directly to renters in your area. Too often tenants simply assume they’re unable to qualify to borrow and buy. And even if they aren’t ready to buy for a few years, set them up with an MLO to learn what amount they can borrow.
Then give them reasons to commit to a savings program for a 20% down payment. Establish a relationship now as an agent they can trust for solid advice, the first step in becoming their buyer agent when they are ready.
