California Renters Qualify for Homeownership But Lack Financial Knowledge to Purchase
While low affordability is the biggest obstacle most renters face in becoming homeowners, 14 percent of California renters can afford to purchase a home but are foregoing homeownership partly because they don’t have the financial knowledge to do so, according to research findings by the California Association of Realtors.
Of the nearly 6 million California renters statewide, 826,000 could qualify to purchase a median-priced home in the county in which they reside. Five in 10 who qualify to purchase a home are white (51.4 percent), 12 percent are Asian, more than one in four is Hispanic (26.9 percent), and 6 percent are Black.
A lack of financial literacy is one of the biggest barriers preventing renters from becoming homeowners. Nearly three-fourths (73 percent) believe a down payment of at least 20 percent is required to purchase a home, and 72 percent are unaware of loan programs that require less than 20 percent down payment. Additionally, nearly seven in 10 (69 percent) would purchase a home if they could put down a lower down payment.
“While many renters earn the income and have the credit required to buy a home, they have misconceptions about what it takes to become a homeowner, which is holding them back from buying a home or causing them to give up on their American dream,” said Arcadia Association of Realtors president, Kelvin Chang. “Prospective first-time buyers should be aware that there are many down payment assistance programs offered by local housing agencies and low down payment programs from the Federal Housing Administration, U.S. Dept. of Agriculture and the Veterans Administration.”
Los Angeles, San Bernardino, San Diego and Sacramento counties boast the largest number of qualified renters.