Best Cities for Homeownership in California
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Home prices have risen steeply across California in recent years, and while that may be a barrier to homebuyers just entering the market, it could be good news if you’re already a homeowner in the state. A house you purchased for a low price several years ago may be worth a good deal more today, depending on where you bought. The median value for owner-occupied homes in California is a hefty $443,400, according to the most recent U.S. Census figures.
There are factors other than home value appreciation that make for a homeowner-friendly location, of course. For example, you will want to consider overall housing costs (e.g., mortgages, taxes, utilities, insurance) or whether you’ll have to fight through hours of traffic each day to get to work.
To uncover the best spots for homeownership in the Golden State, LendingTree combed through data points including home value appreciation, average commute times and unemployment rates. Here are the top places for homeowners in California, along with tips for putting yourself on the path to homeownership if you are considering a move to the state.
- The Salinas metro area scored the highest in California. This area has a high median home value ($440,000), a moderate unemployment rate for the area (6%), solid median home value appreciation (24.33%) and a reduction in median housing costs from 2013 to 2017 (-3.52%).
- Interestingly, the San Jose-Sunnyvale-Santa Clara metro area and the San Francisco-Oakland-Hayward metro area ranked 7th and 14th, respectively. While both of these metro areas have high median home values, ranked first and second, an unemployment rate of 5.8% and robust median home value appreciation, they did not earn the top spot because of long commutes (28.2 and 32.8 minutes, respectively) and rising housing costs overall.
- The Clearlake micro area ranked last in California. This area has a low median home value ($202,300), high unemployment rate (11.2%), long average commute time (28.9 minutes) and a low median home value appreciation from 2013 to 2017 (0.95%).
The best cities for homeownership in California
1. Salinas metro area
About 40 miles southeast of Santa Cruz sits the Salinas metro area. Median home values here are $440,000, while housing costs decreased by 3.5% from 2013 to 2017. At the same time housing costs went down, home values rose by a hefty 24.3%.
The unemployment rate here in 2017 was a relatively low 6%, and the average commute time was just 22.4 minutes.
2. Napa metro area
The Napa metro area is not far from the San Francisco Bay Area. In fact, some people who live in Napa commute all the way there and back each day. Given the area’s famed beauty and status as an elite wine-producing region, it’s easy to understand why homes here are so expensive. The median home value is $578,300 (still much more reasonable than San Francisco itself). While home values have appreciated by 29.3% over the past few years, the costs to run a home have basically stayed the same, increasing by just 0.05%. The unemployment rate in 2017 was 5.4%, and the average commute time is 24.1 minutes.
3. San Luis Obispo-Paso Robles-Arroyo Grande metro area
The San Luis Obispo area is a scenic college town. You might not think homes here would be expensive, given the area’s many student inhabitants; but, nevertheless, home values are quite high. The median was $506,600 in 2017, and values have increased steadily in recent years. Residents also have a quick commute time to work — just under 22 minutes on average — and the lowest unemployment rate on our list, at 4.8%.
4. Santa Rosa metro area
Situated right next to the Napa metro area, the Santa Rosa area is yet another community famed for its beautiful scenery, balmy climate and proximity to world-class wine. And, just like Napa, its outer fringes encompass the suburbs of San Francisco, driving up home values, which come in at a median of $523,200. Homes values overall appreciated by 25.8% from 2013 to 2017. At the same time, the area saw small reductions (-1%) in homeownership costs. Santa Rosa’s unemployment rate in 2017 was 5.9%, and its average commute time is about 25 minutes.
5. Vallejo-Fairfield metro area
The Vallejo-Fairfield area is home to hundreds of businesses looking for a convenient location to serve the Bay Area. Home values here are some of the lowest of all of the metro areas in this cluster, with a median of $353,200. Home values in the area also saw sky-high appreciation from 2013 to 2017, at 30%. If you own a home here, you may have been lucky enough to catch this upward trend in prices. What dropped this community down further on our list was the high 2017 unemployment rate of 8.5%. The average commute time is also the highest on our top 10 list, at just under 32 minutes. On the bright side, housing costs decreased by almost 6% from 2013 to 2017.
6. Madera metro area
The Madera metro area sits in the Central Valley. Like most cities in the region, its topography is quite flat, but there’s easy access to the Sierra Nevadas for recreation and ample employment opportunities in Fresno just to the south. Median home values here are the lowest on this list, at just $227,800. Housing costs have also dropped more than any other top 10 town, with close to an 8% decrease from 2013 to 2017. What kept this metro area from rising further was its relatively high 2017 unemployment rate of 8.3%.
7. San Jose-Sunnyvale-Santa Clara metro area
The median home value in this area is a whopping $819,800 — the highest on our list. It’s no wonder why; this area is considered the heart of Silicon Valley. The 2017 unemployment rate was also relatively low, at just 5.8%. Homes here experienced significant appreciation (about 28% from 2013 to 2017), but homeownership costs also increased by 3% over the same time period. The average commute time is the second highest on our top 10 list, at about 28 minutes.
8. Truckee-Grass Valley micro area
Median home values in this area are relatively low, at around $398,500, especially compared to the tech-focused Bay Area. Values have also appreciated more slowly, at an average rate of 9.4% from 2013 to 2017. However, housing costs also decreased by about 4.6% over that same time period. The 2017 unemployment rate here was 7.3%, and the average commute time is a relatively short 24.5 minutes.
9. Oxnard-Thousand Oaks-Ventura metro area
Los Angeles is famous for its congestion, but the nearby Oxnard-Thousand Oaks-Ventura area offers a bit more breathing room. People living in this area have an average commute time of just under 27 minutes. Median home values are on the high side, at $537,900, although appreciation was a little slower than in some of the other high-priced areas, at about 18.6% from 2013 to 2017. Homeownership costs decreased by 1.3% over the same time period.
10. Redding metro area
Our only northern California town on the list, Redding is more of a mecca for outdoor adventurers than tech employees. That’s because it’s centrally located between numerous outdoor attractions, including Lake Shasta, the Sierra Cascades and the Trinity Alps. The median home value here is the second-lowest on our top 10 list, at $240,200. Homes have also seen the slowest appreciation, rising just 4.5% from 2013 to 2017. Homeownership costs did drop by 2.8% in that same time span. Residents here also have the shortest average commute time of any town on our list, at just under 20 minutes.
Homebuying tips for California
If you already own a home in California, you have likely made a sound investment as home values have appreciated significantly in most parts of the state. But, for new homebuyers, breaking into the housing market can be difficult.
If you work in a relatively high-paid profession, such as medicine or software engineering, living in California will be easier. It is, in fact, the influx of these types of positions that have, at least in part, driven up home values in many areas of the state. But if you’re like many people and not earning a six-figure salary, it may be harder to afford your first home. Still, there are many options available for homebuyer assistance. Keep in mind these programs have their own specific requirements, which means you’ll need to get creative in your research. Here are a few good places to start:
- California Housing Finance Agency (CalHFA)
- City-Specific Housing Programs
- CalHFA’s School Teacher and Employee Assistance Program
- CalVet Home Loans (for veterans)
- USDA Loans (for rural areas)
- VA Loans (for veterans)
One of the biggest challenges facing most would-be California homebuyers is saving up for a down payment. Aside from applying for a down payment assistance program (if you qualify), the only way to really make progress in this area is with the time-tested advice of reducing your expenses while increasing your income and saving the difference. You can also get creative with the money you already have. For example, if you work in the tech industry, you may be able to use your stock options to partially fund a down payment.
It’s a good idea to save up for at least a 20% down payment, if you can. This will allow you to shave off PMI costs from your mortgage, making it more affordable in the long run. Your monthly mortgage costs will also be lower overall.
By putting down an even larger down payment, you can decrease your monthly mortgage costs further. The more you can save up ahead of time, the smaller the loan you have to take out — and the smaller your monthly payment will be each month thereafter.
Meanwhile, you can check mortgage rates for California here.
The methodology for this study was simple and straightforward.
1: Collect metropolitan statistical areas (“MSAs”) and micropolitan statistical area from the U.S. Census Bureau using 2017 population data.
2: Each MSA and micropolitan statistical area was ranked on a scale from 31 (Best) to 1 (Worst) for five different metrics. Those metrics are:
Median Home Value (31-Highest Value, 1-Lowest Value)
Unemployment Rate (31-Lowest Rate, 1-Highest Rate)
Average Commute Time (31-Shortest Time, 1-Longest Time)
Median Home Value Appreciation (2013-2017) (31-Greatest Appreciation, 1-Smallest Appreciation)
Median Change in Yearly Housing Costs (2013-2017) (31-Smallest Cost Change, 1-Greatest Positive Cost Change) — The formula for this metric is:
(((Monthly Housing Costs for 2017 *12)+(Real Estate Tax for 2017))/ ((Monthly Housing Costs for 2013 *12)+(Real Estate Tax for 2013))-1)
3: An average score was then calculated for each MSA based upon the scores received for each metric.
4: The MSAs and micropolitan statistical area were then ranked on a scale of 1 (Best) to 31 (Worst) based on their average scores.
5: All metrics were ranked equally.
All data were obtained from the U.S. Census Bureau. More information on where the data came from is provided below:
2017 Median Home Value, Monthly Housing Costs, Real Estate Taxes
- Filtered for all MSAs
- Then filter for Financial Characteristics for housing units with a mortgage – 2013-2017 American
- Community Survey 5-Year Estimates
2017 Unemployment Rate and Median Commute Time
- Filtered for all MSAs
- Then filter for Selected Economic Characteristics – 2013-2017 American Community Survey 5-Year Estimates
2013 Median Home Value, Monthly Housing Costs, Real Estate Taxes
- Filtered for all MSAs
- Then filter for Financial Characteristics for housing units with a mortgage – 2013-2017 American Community Survey 5-Year Estimates