According to the real estate site Trulia, rich San Franciscans are 3.6 times more likely to be able to buy a home than poor ones.
Why is this significant, we may wonder? After all, it goes without saying that rich people are more likely to be able to buy everything. That’s the fundamental definition of being wealthy in the first place.
But the “homeownership gap”—Trulia’s term for of how many more high-earning and low-earning residents own homes—is not uniform across American cities. And when it’s remarkably high in a city, that can mean problems for the regional economy.
Nationwide, rich Americans are about 2.3 times more likely to be homebuyers, down from 2.4 in 2012 but up from 1.9 35 years ago.
Note that “rich” in this case means the top one-third of earners, while “poor” means the bottom third, each bracket a fairly diverse spread of incomes in itself.
(The site used only households headed by people 55 years old or younger, since retirees without income might skew the data.)
Here’s the remarkable thing: Of 11 California cities singled out by Trulia writer Felipe Chacon—San Francisco, Oakland, San Jose, Sacramento, Fresno, Bakersfield, Riverside, Oxnard, San Diego, LA, and Anaheim—not a single one has an ownership gap equal to or less than the national average.
Of course, since buying in the city always costs more, there’s a separate income gap just for the largest metro areas: 2.8. Does any place in California beat that?
Yes: Riverside, with 2.4. That’s it. Bakersfield ties the city average. San Jose comes close at 2.9. But San Francisco and, perhaps surprisingly, Oakland, blow it away at 3.6 and 3.5 respectively.
The only California city with a less flattering divide between rich and poor: LA at 4.2, among the highest in the country.
Such metrics are always going to go up and down. But ideally you want as many low-income people as possible to be within striking distance of home ownership.
After all, as the New York Times Magazine observed in May:
“There is a reason so many Americans choose to develop their net worth through homeownership: It is a proven wealth builder and savings compeller. The average homeowner boasts a net worth ($195,400) that is 36 times that of the average renter ($5,400).”
Those figures are from 2013, but not likely to be any closer together today.
Forbes, writing in 2016 and noting that home ownership is at a 50-year low, points out that “homeowners after 7-to-10 years typically sell their starter home and trade up [...] and in the process contribute to economic growth and job creation.”
But the fewer people who can snag a starter home to begin with, the more we all miss out on those future boons.
After inflation, that’s a value of nearly $24,000, even with the bust years during and after the mortgage crisis factored in. The average SF home buyer in 2000, if they managed to hold onto the place, is now by default much wealthier, to an almost alarming degree.
While the average renter just has someone else’s roof over their heads.