A recent study by personal finance platform WalletHub indicates that aspiring homeowners in California may face greater challenges getting onto the property ladder compared to most other Americans.

Aspiring homeowners in California may face greater challenges than most Americans, according to a recent study by the personal finance platform WalletHub.

The analysis ranked 300 U.S. cities based on affordability, real estate market conditions, and quality of life, revealing that eight of the ten worst cities for first-time homebuyers are in California.

“California's high living costs, steep real estate prices, and competitive markets contribute to its poor rankings for first-time homebuyers,” WalletHub analyst Cassandra Happe told Newsweek. “These conditions make it difficult for new buyers to afford homes, leading them to explore more affordable options in other states.”

The lowest-ranked city overall was Berkeley, which scored 300th place, 297th in affordability, 263rd in real estate market conditions, and 281st in quality of life. Santa Monica also ranked poorly, coming in last for affordability, 276th for real estate market conditions, and 188th for quality of life.

“Berkeley is ranked among the worst cities primarily due to its extremely high cost of living and real estate prices,” Happe explained. “The city’s close proximity to San Francisco drives up demand but also limits housing availability, causing home prices to be out of reach for many potential buyers.”

Happe continued, “This competitive real estate market worsens affordability issues, making it challenging for first-time buyers to enter the market. Additionally, while Berkeley offers cultural amenities and a vibrant community, it also faces problems such as high crime rates and other quality of life issues, which further diminish its attractiveness compared to more affordable options.”

“Local policies and economic conditions also significantly impact the city’s ranking as one of the least favorable destinations for homebuyers looking for affordability and accessibility in California,” Happe added.

In addition to Berkeley, other cities faring poorly for first-time homebuyers included Anchorage, Alaska, ranked third-worst (298th overall), Santa Barbara fourth (297th), Oakland fifth (296th), San Francisco sixth (295th), Los Angeles seventh (294th), Glendale eighth (293rd), and Costa Mesa ninth (292nd). The tenth-worst city for first-time buyers was New York, New York (291st).

With mortgage rates still around 7 percent and home prices remaining unusually high compared to pre-pandemic levels, purchasing a home has become increasingly challenging for first-time buyers. This difficulty is especially notable in California, one of the most expensive housing markets in the United States.

In June, the median home price in California was $858,600, reflecting a 7.8 percent increase from the previous year, according to Redfin. In comparison, the national median home price was nearly half of that at $442,525, which represents a 4 percent rise year-over-year.

In Berkeley, a prominent college town, home prices are even higher. In June, the median sale price for a home in this city on the eastern shore of San Francisco Bay reached $1,530,000, marking a 7.4 percent increase from the previous year.

The renowned beach resort town of Santa Monica in Los Angeles County surpasses Berkeley in terms of home prices. In June, the median sale price for a home in Santa Monica reached an astounding $1,672,000, representing a 4.2 percent increase from the previous year.

According to a recent Harvard University study, "The State of the Nation's Housing 2024," purchasing a home in California became increasingly out of reach in 2023, particularly in Bay Area cities such as San Jose, Sunnyvale, and Santa Clara, as well as in Los Angeles.

In these cities, median home prices were up to 11 times greater than the average annual wage of approximately $113,000 last year. The rapid rise in housing costs far outpaced income growth, making it difficult for first-time homebuyers to save enough for a down payment.

"High housing costs, driven by strong demand and limited supply, have created substantial barriers to homeownership for many Californians," Happe told Newsweek. "Affordability issues force potential buyers to either postpone their home purchases or look for more affordable homes in distant areas, leading to longer commutes and increased strain on local infrastructure."

The challenges of attaining homeownership in California have significant implications for socioeconomic diversity and economic stability, according to Happe.

“It restricts middle and lower-income families' ability to build wealth through property ownership, exacerbating wealth inequality,” she said. “High housing costs also impact overall economic growth by discouraging workforce mobility and limiting spending power.”