If you're a millennial living in California, buying homes doesn't come any harder. California ranked as the toughest state in the nation for first-time home buyers, who typically would be in the millennial age bracket of 18 to 34, according to a recent report by Claes Bell, an analyst with Bankrate.com. There are several reasons the Golden State placed last in the report, including the relatively high cost of housing, the tight market for available entry-level homes and the struggle that millennials face in saving for a down payment. In Southern California, the median home price for new and resale homes hit $460,000 in February, up 7% from a year earlier and the latest gain in nearly five years of steady price increases, real estate firm CoreLogic reported recently.

We asked Bell to walk us through the reasons that California is the nation's hardest state for buying that first house and how — despite the hurdles — it's still possible for millennials to get into the market. Here's an edited excerpt: California consumes one of the highest percentages of people's income for housing. Folks in that typical first-time home buyer age range, anywhere from the mid-20s to early 40s, are going to have a difficult time in many cases finding room in their budget for a California-sized mortgage payment. Not only do homes cost so much but they cost so much relative to people's incomes. In California, people are going to be earning more than the average state, but because the houses are just that much more expensive, affordability becomes a real problem. Home builders are not keeping up with demand for homes in California. There just aren't enough homes being built relative to the growing number of households in California. I looked at the growth of the housing stock and the growth in the number of households from 2010 to 2015.

You would want that growth spread to be getting wider, because that would show an increase in housing relative to the number of people there. Unfortunately, it's going the wrong way in California. The spread basically is negative there. I've seen a lot of research in recent years that the starter home that was kind of mainstay of the home-building market has sort of fallen out of favor and they're just building more homes at the top of the market for folks rolling over their equity from another home. They're kind of leaving that bottom of the market unsupplied. It's a huge issue, and it's going to be more of an issue as more millennials grow into this prime first-time home buyer range and it's going to have all kinds of problems down the line.

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