Between 2018 and 2023, millennials in California navigated a housing market that shifted fast and often. They saw prices spike, interest rates rise, and remote work unlock new possibilities—and new complications. Some chased bigger homes in farther-flung suburbs, while others downsized or snagged second homes in vacation towns. From the Bay Area to the Inland Empire, young buyers and sellers adjusted to affordability pressures, migration waves, and a reshaped sense of home. Looking back, their choices reveal not just a reaction to market forces, but a broader generational shift in how and where people live.

Types of Properties Millennials Are Buying

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Single-Family Homes: The Persistent Dream

Single-family homes remain the classic dream for millennial buyers, but sky-high prices mean many have had to adjust their expectations. In California’s expensive metros, detached houses often cost well out of reach for first-time buyers. By mid-2023, the statewide median price for a single-family home hovered around the $800,000+ range.

At that price, a 20% down payment is over $160,000 – a sum that is prohibitive for most young adults without significant savings or family help. Indeed, only about 16% of California households could afford the median house in 2022–23, down from 51% a decade earlier. It’s no surprise that many millennials have needed to explore alternatives.

Condominiums and Townhomes: The Affordable Entry Point

Condominiums and townhomes have become popular choices for millennials looking to buy their first home in California’s priciest markets. These attached units tend to be significantly cheaper than detached houses in the same city. By 2023 the median condo/townhome price was around $640,000 statewide, roughly 20–25% less than the median single-family home.

This pricing gap matters: about 25% of households could afford the median condo (versus only 16% for a house). In practice, that meant many young buyers who couldn’t touch a house in San Francisco or Los Angeles opted for condos as their entry point. New townhouse developments in suburban areas also attracted millennial families who wanted a bit more space than an apartment but at a lower cost than a traditional house.

The condo market itself saw ups and downs – early in the pandemic, dense multi-unit living lost some appeal, but by 2021–2022 condo sales had rebounded as buyers rushed to grab any home they could afford.

Alternative Housing Options

Other property types have also played a role. Some millennials have stretched to buy “fixer-upper” older homes or even small multi-unit properties. A few resourceful young buyers purchased duplexes or triplexes, living in one unit and renting out the others to offset the mortgage.

And in a bid for affordability, a subset have even looked at manufactured homes (mobile homes), which in California sell for a fraction of local house prices. The average new manufactured home in the state sold for around $155,000 in 2023 (excluding land) – a vastly lower price point, albeit with caveats like park fees.

In short, California millennials have proven willing to consider a wide spectrum of property types. While the single-family house with a yard remains the ideal for many starting families, the reality of the market means condos, townhouses, and other alternatives have become crucial stepping stones for young buyers.

Upsizing, Downsizing, and Second Homes

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Millennial homeowners in California have reached very different life stages by 2018–2023, leading to divergent moves. On one end, many older millennials (now in their late 30s to early 40s) have been upsizing – selling starter homes and moving into larger houses to accommodate growing families or remote work needs. On the other end, a few have had to downsize or step back due to economic pressures. And notably, some higher-earning millennials even took part in the pandemic-era vacation home boom, buying second homes for investment or leisure.

Millennial Move-Up Buyers (Upsizing for Space)

After a decade of ownership delays, the late 2010s and especially the 2020–2021 housing boom saw many millennials finally buying homes – and those who already owned often traded up to something bigger. In fact, one hallmark of this period was a wave of “move-up” millennial buyers. Historically, younger sellers often list their homes because they need more space or are relocating for jobs.

Several factors enabled this upsizing trend. Crucially, record-low interest rates in 2020–2021 made larger homes more attainable on a monthly-payment basis. Many millennials took advantage of 30-year mortgage rates in the 2.7%–3% range. Lower financing costs meant they could afford more house for the same payment, effectively “buying” extra square footage without an outrageous jump in monthly expense.

This led some to make the leap that previously seemed impossible – for example, moving from a condo to a single-family house with a yard, or from a two-bedroom starter to a spacious four-bedroom in the suburbs. One analysis noted that it was somewhat paradoxical: even moderate-income buyers managed to upsize during the pandemic boom by leveraging low rates to stretch into bigger homes.

The Remote Work Effect

Remote work also played a big role in upsizing. As millions of Californians began working from home in 2020, having extra rooms, a home office, or outdoor space became a priority. Those millennials who had the means didn’t hesitate to seek out larger homes with additional space.

For instance, many Bay Area tech workers who were in their 30s and had started families decided to leave cramped city apartments or bungalows and relocate to places like Sacramento in search of a bigger home and better quality of life. Often these were dual-income millennial households (earning solidly but under the ultra-high Silicon Valley level) who sold a previous home or saved aggressively, then bought a larger house in a cheaper region.

The trend was summed up by a Sacramento real estate agent: “Half of the buyers I’m working with are moving in from out of town, all but one from the Bay Area…they want a bigger home and better quality of life.” In essence, older millennials used the unique conditions of the pandemic – remote flexibility and low borrowing costs – to finally trade up to the roomy family homes they had been eyeing.

Downshifting and Downsizing

While upsizing was common for those who could afford it, some Californians (including a segment of millennials) found themselves downsizing or stepping back from homeownership, especially once the market cooled. It’s important to note that most true downsizers tend to be older (empty nest Boomers or Gen X) selling large long-held homes.

However, a subset of younger owners also downshifted during 2020–2023. For example, if a millennial homeowner lost their job or saw income drop during the pandemic, they might have sold a home they could no longer comfortably afford and either moved to a cheaper area or switched back to renting. Early in the pandemic, there were cases of families deciding to simplify their finances amid uncertainty – cashing out equity by selling and moving somewhere less expensive.

By 2022–2023, with interest rates way up, even some would-be “move-up” buyers changed course and became “move-down” buyers. In other words, high costs forced some millennials to adjust expectations downward. A few who initially aimed to trade up realized they couldn’t swing the higher mortgage at 6–7% rates, and instead opted to buy a smaller, more affordable home or condo to reduce expenses.

Additionally, as home prices peaked, some opportunistic owners – including older millennials – sold at the top of the market and temporarily downsized or rented, hoping to buy again later at a better price point. Downsizing among millennials was not as widespread as upsizing, but it was part of the mix: the turbulent economy meant housing plans didn’t always move in a straight line, and flexibility was key.

The Pandemic Second-Home Boom (and Bust)

One striking trend in 2020–2021 was a surge in vacation home and second property purchases, and millennials participated alongside older generations. With travel limited and working remotely normalized, many people looked to buy cabins, beach condos, or mountain retreats as a way to escape and invest.

Nationwide, demand for second homes skyrocketed – at one point in early 2022, second-home mortgage rate locks were 87% above pre-pandemic levels. In California, this manifested in millennials with means snatching up properties in traditional getaway spots: think a ski cabin at Lake Tahoe, a desert house in Palm Springs, or a coastal cottage on the North Coast.

Thanks to 3% mortgage rates and possibly some pandemic savings, a dual-income millennial household earning under $250K could afford a modest vacation home in these areas. Some buyers viewed these as pure leisure investments, while others tried creative strategies – for example, buying a second home in a cheaper area to live in, while renting out their primary home in the city.

However, this secondary-home craze cooled off significantly by late 2022 and 2023. Regulators and lenders introduced higher loan fees for second homes, and the jump in mortgage rates made financing a vacation property far less attractive. Many millennials who might have been interested in buying a getaway house put those plans on hold as borrowing costs rose.

By 2023, second-home demand had come back down to earth, ending what had been a brief window where some younger Californians expanded their real estate footprint beyond their primary residence. Still, the fact that millennials were even in the mix for second homes speaks to how unusual the pandemic housing market was.

Regional Differences: Where Are California Millennials Buying?

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California is a huge state with very diverse housing markets. Millennial homebuying trends have varied widely between tech-centric coastal regions (like the Bay Area and Los Angeles), the more affordable inland areas (Central Valley, Inland Empire), and everything in between. From 2018 to 2023, we saw notable regional shifts: many millennials migrated from high-cost coastal cities to cheaper regions in search of affordable homes.

Bay Area: Extreme Prices Push Buyers Outward

In the San Francisco Bay Area, millennials faced some of the steepest housing costs in the nation. By 2021, the median home price in the Bay Area exceeded $1.1 million, and it only climbed higher into 2022. This made traditional homeownership extremely challenging for first-time buyers.

Many Bay Area millennials remained renters longer or looked to buy condos/townhomes rather than single-family houses. Those determined to buy a house often had to move far out – to the edges of the Bay or beyond. For example, budget-conscious young buyers targeted communities in eastern Contra Costa or Solano County (places like Antioch, Vallejo) where single-family homes in the $500K–$700K range could almost be attainable.

The trade-off was a long commute (at least before remote work became common) or being far from the urban job centers. Within the Bay’s urban core, some millennials managed to buy by pooling resources or seeking below-market-rate ownership programs, but overall this region saw an outflow of young people.

Los Angeles and Southern California: The Inland Push

Southern California’s coastal counties (Los Angeles, Orange, San Diego) were also expensive, though generally slightly less so than San Francisco. Millennials buying in L.A. or Orange County often faced median prices in the high $700Ks to $800Ks by 2021.

Many who grew up in L.A. found themselves looking eastward for relief. Inland Southern California – the Inland Empire (Riverside and San Bernardino counties) – became a popular destination for those priced out by the coast. Los Angeles millennials in their 20s and 30s moved east down the I-10 or I-60 freeways, where their money could buy a lot more.

In Riverside/San Bernardino, median home prices in the mid-2020s were around $500K–$600K, meaning a household income of roughly $120K–$140K could afford the median home – still a stretch, but far easier than needing $200K+ income for L.A. This migration from L.A./Orange to the Inland Empire was accelerated by remote work (which made commuting distance less important for a couple years).

As a result, the Inland Empire saw strong growth fueled by incoming millennial buyers, while coastal L.A. saw younger buyer numbers stagnate or even decline.

Central Valley: The New Hotspot

California’s Central Valley – cities like Sacramento, Stockton, Fresno, Bakersfield – historically has lower home prices and has attracted those seeking affordability. During 2018–2023, this pattern intensified. The state capital Sacramento emerged as a top destination for migrating Bay Area millennials. By 2023, Sacramento was actually the #1 destination for Redfin users moving out of the Bay Area.

The typical Sacramento-area home sold for around $575,000 in 2023, nearly $1 million less than the typical home in San Francisco. That price difference is staggering, and many young families decided it was worth it to relocate inland. With a 7% mortgage rate, the monthly payment on a median Sacramento home would be about $3,900, compared to a jaw-dropping $10,000 per month for a median San Francisco home.

Even for those who could technically afford the Bay Area, the prospect of owning a spacious house in Sacramento with a yard (and maybe keeping a lot more of your paycheck) was enticing. Smaller Central Valley cities like Stockton or Modesto saw similar influxes on a smaller scale – millennials from the Bay Area or even L.A. looking for a place where a middle-class salary could actually buy a home.

As one report noted, moving from a coastal county to an inland one could mean the difference between “renting indefinitely versus buying a house” for a moderate-income family.

The Great Exodus

Meanwhile, some regions saw millennials leaving. Coastal cities like San Francisco and Los Angeles experienced net out-migration of young adults during the pandemic, driven partly by high housing costs. San Francisco in particular saw an exodus of people in their 20s and 30s in 2020–2021; its population data showed young adults made up the biggest losses.

High rents and home prices, combined with remote work flexibility, pushed millennials out. Many went to the places mentioned above (Sacramento, etc.), some left California entirely (popular out-of-state moves included Texas, Arizona, Nevada). This outflow was significant enough that California’s overall population growth turned negative in recent years – the state lost a net 407,000 residents to other states from July 2021 to July 2022, and millennials were a big part of that story.

As one analysis put it, “The young people who are leaving… are leaving because they can’t buy a house here.” That quote underscores the regional dynamic: California’s expensive metros have effectively “exported” some of their millennial population to either other parts of California or out of state, simply because of housing affordability.

City Stayers and Returnees

On the flip side, not all millennials fled the big cities. Many stayed in the Bay Area and SoCal and found workarounds – whether that meant buying a smaller condo, moving in with family to save for a down payment, or leveraging two incomes to barely make it work.

Some even saw opportunity in the city when others left: rents dropped in San Francisco in 2020, for instance, which might have helped a few renters save more money or even step into ownership as competition briefly waned. By late 2022 and 2023, though, rents and prices in the cities were climbing again, and remote work began transitioning to hybrid or office returns for many.

That led to an interesting mini-trend of its own: millennials who had moved far away during the pandemic sometimes turned around and sold those distant homes when called back to the office. Opendoor (the real estate tech company) reported that 23% of millennial sellers in a 2023 survey cited the end of remote work as a key reason for selling and moving. For example, a young couple might have bought a house in the mountains of Lake Arrowhead in 2021, then in 2023 realize one or both need to be back in L.A. for work – prompting them to sell that remote home (often with some regret). This illustrates that regional moves were not one-directional; some pandemic relocations proved temporary.

Impact of COVID-19, Remote Work, and Market Conditions

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It’s impossible to discuss 2018–2023 without addressing the shockwaves of the COVID-19 pandemic and the wild market swings that followed. The pandemic period brought record-low mortgage rates, a sudden shift to remote work, a rush of buyer demand, and then rapidly rising prices – all of which heavily impacted millennial homebuyers and sellers in California.

The COVID Housing Frenzy

When the pandemic hit in 2020, many feared the housing market would crash. Instead, after a brief pause, it exploded. Starting around mid-2020, California home sales and prices took off at a pace not seen in years. From June 2020 to May 2022, the median price of an existing single-family home in California shot up from about $626,000 to $900,000 – a 44% increase in less than two years.

This price spike was truly unprecedented. Several factors converged to cause it: the Federal Reserve slashed interest rates, bringing 30-year mortgage rates down to record lows (~2.7%–3%); people stuck at home during lockdown realized they wanted more space; and remote work enabled buyers to look farther afield, expanding their options.

For millennials who had been on the sidelines, 2020 presented a sudden window of opportunity: low rates meant your money went further, and if you were fortunate to keep your job (especially in tech or other fields that transitioned to remote work), you could finally house-hunt seriously. Indeed, the pandemic homebuying wave saw a lot of pent-up millennial demand released. One Federal Reserve analysis noted that 2020–2021 saw “peak homebuying participation from younger buyers” as well as from low- and moderate-income buyers.

Bidding Wars and Buyer’s Remorse

However, the frenzy had a dark side: intense competition and rapidly rising prices. Millennials often found themselves in fierce bidding wars. Homes were selling within days, often above asking price, with multiple offers. It was common for first-time buyers to be outbid by older buyers with cash or investors.

This was frustrating for many millennials. Some stretched their budgets dangerously just to win a bid; others waived contingencies or skipped inspections – decisions that sometimes led to buyer’s remorse later. By mid-2022, stories abounded of young buyers feeling burned by the process – either they hadn’t been able to buy at all, or they bought something and later wondered if they made a mistake.

In fact, surveys found a majority of millennial and Gen Z homebuyers had at least some regrets, whether due to underestimating expenses, rushing the decision, or buying in an unfamiliar area. The low rates enticed them, but the speed of the market was harrowing.

The Remote Work Revolution

For millennials, one of the biggest pandemic impacts was the normalization of remote work. This shift fundamentally changed housing choices. Suddenly, proximity to an office was less critical, and this freed many young professionals to move to suburbs, smaller cities, or even out of state while keeping their jobs.

California saw this in large numbers: tech employees left San Francisco for places like Truckee or Austin; L.A. workers moved to Joshua Tree or Phoenix – all in search of more space or a lower cost of living. Remote work also led to a repurposing of housing needs. Millennials started prioritizing features like an extra bedroom or a dedicated office space, a backyard for pets and kids, or simply more square footage since they were spending all day at home.

Interestingly, remote work’s impact on affordability was double-edged. On one hand, it allowed millennials to chase affordability (moving from Silicon Valley to a far cheaper Sacramento, for example). On the other hand, the exodus of remote-capable workers to affordable towns pushed up prices in those very towns, as seen with Sacramento or parts of the Central Valley.

So in effect, remote work shifted some affordability problems around: easing pressure in the core (to a degree) but creating new pressure in formerly lower-cost markets. By the end of 2023, many employers were calling workers back at least a few days a week. The big question is whether those millennials who moved will stay put. Some have returned to the cities, while others have tried to negotiate continued remote arrangements or switched jobs to maintain their new lifestyle.

Interest Rates Whiplash

If 2020–2021 was defined by ultra-low rates, 2022–2023 was defined by their sharp rise. To combat high inflation, the Federal Reserve started hiking rates in early 2022, which caused mortgage rates to climb fast. The average 30-year mortgage rate went from about 3% in late 2021 to over 6% by mid-2022, even touching 7% later in 2022.

This effectively slammed the brakes on the housing rush. Higher rates drastically reduce what buyers can afford – or as one metric shows, the monthly payment on a mid-tier California home jumped roughly 82% from January 2020 to late 2023 due to the combined effect of higher prices and rates.

For millennials who hadn’t bought yet, 2022 felt like the door to homeownership suddenly swung shut again. Many were priced out as the same home now cost hundreds of dollars more per month in financing. The number of first-time buyers plummeted as 2022 went on. In fact, the NAR (National Association of Realtors) Profile of Home Buyers found the share of first-time buyers fell to a record low of 26% of home sales in 2022, down from 34% the year before.

Since the vast majority of first-time buyers are millennials, this statistic reflects how severely higher rates sidelined young buyers. Those millennials who did buy in late 2022 or 2023 had to either be higher-income or found creative ways (larger down payments, adjustable-rate loans, family assistance) to make it work.

Millennials in 2018–2023 vs. 2008–2017: A Comparison

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How do the recent trends compare to the previous decade? Millennials’ path to homeownership in California has been markedly different from the generation’s early years (late 2000s and 2010s). The period 2008–2017 included the Great Recession and its aftermath, which had lasting effects on millennial homebuying behavior, whereas 2018–2023 saw an economic boom, a pandemic upheaval, and new market extremes.

Delayed Homeownership

Millennials as a cohort were slower to become homeowners than previous generations. By 2020, Californians aged 25–34 had a homeownership rate of only about 15.5% (down from 39% in 1980), and those 35–44 were at about 39.7% (down from 64% in 1980). This dramatic decline unfolded over decades, but within it, the 2008–2017 period was particularly tough: many older millennials (born in the 1980s) should have been buying in the early 2010s, but were hampered by the recession’s fallout.

Job losses and low savings meant delayed home purchases. As a result, the median age of first-time buyers increased. In 2008, first-timers were typically around 30–32 years old; by 2017 it had crept into the mid-30s. By 2022 it jumped to 36. In California specifically, homeownership is so delayed that the age at which a majority of residents own homes is now 49, whereas in the U.S. overall it’s 35.

That gap widened from 2008 to 2023. In short, millennials 2008–2017 were largely sitting out of homeownership (or unable to break in), whereas 2018–2023 saw more finally getting in – but later in life and still at lower rates than previous generations.

Market Conditions Then and Now

The late 2000s were defined by a housing crash. Home prices in California plummeted around 2008–2011, which ironically made homes more affordable for a few years. Some enterprising older millennials did buy homes at bargain prices then (especially investors or those with help), but lending standards had tightened so much that it wasn’t easy for young buyers without substantial down payments.

Meanwhile, many millennials were still finishing college or in their early careers during the recession, and some moved back home with parents. The 2010s (2012–2017) saw a recovery – prices climbed back up, especially in coastal California, and by 2017 the market was booming again.

Compare that to 2018–2023: prices were already high at the start, then soared even further during the pandemic boom. In 2018, California’s median home price was around $570k; by 2021 it hit roughly $758k and peaked around $900k in 2022. So millennials in the late 2010s and early 2020s faced far higher nominal prices than those a decade prior – out of reach for many without dual incomes or equity from a prior home.

The one advantage 2018–2021 had was low interest rates, which improved affordability compared to what it would have been with higher rates. In contrast, 2008–2012 had lower prices but often higher rates (4–6%) and stricter credit, and 2013–2017 had moderate rates (3.5–4.5%) with steadily rising prices. By 2023, rates spiked to ~7%, something not seen since before 2008, creating a new affordability crunch.

Thus, millennials in 2008–2017 dealt with either a collapsing market or a recovering one with rising prices, whereas millennials in 2018–2023 saw an overheated market that then abruptly cooled but remained very expensive.

Changing Buyer Demographics

In the aftermath of the 2008 crisis, investors and cash buyers scooped up many California properties (foreclosures, short sales) – often out-competing would-be young first-time buyers. Millennials in that era lost out to these deep-pocketed buyers frequently. By the mid-2010s, investors pulled back a bit as bargains dried up, and that’s when millennials slowly increased their share of purchases.

In fact, from 2014 through 2021, millennials were the largest generation of homebuyers nationwide each year. They peaked in 2021 at 43% of buyers, as many finally jumped into the market. However, in 2022 this changed: Baby Boomers overtook millennials as the largest buyer group (Boomers 39-42% vs Millennials ~29%), a shift attributed to boomers’ greater equity and ability to pay cash in a high-rate environment.

So comparing decades: in 2008–2017, millennials were up-and-coming but not yet the dominant force in homebuying; in 2018–2023, they became the dominant force (until boomers resurged in the very latest data). Millennials also started forming families in larger numbers in the latter period, driving demand for family-friendly housing.

Conclusion

In conclusion, millennial homebuying in 2018–2023 was characterized by delayed but growing participation, frenzied market conditions followed by hurdles, and creative adaptation – a contrast to 2008–2017 when many millennials simply couldn’t enter the market at all or did so very slowly. By 2023, California millennials are generally buying later, buying smaller (or farther out), and often relying on dual incomes or family help – a different reality than the previous generation’s experience.

The silver lining is that this generation is resourceful: they have shown they will move, compromise on home type, and seize low interest opportunities to achieve homeownership. But the comparison makes one thing clear: the affordability crisis in California has only deepened. Without broad improvements (like more housing supply or specialized assistance), millennials today remain on a more precarious homeownership path than those who bought in the years before 2008.

The hope is that lessons learned and maybe policy responses in the coming years can improve the outlook for the next wave of young buyers.

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