The Cost of Living in California: Can You Afford the Price Tag?

Last Updated: April 5, 2024

California's price tag: Navigating the expenses of daily life

This is pretty easy to answer. California is an amazing place to live. There a truly outstanding outdoor recreational opportunities that as usually available year-round. It is culturally diverse, and restaurants from every culture exist side by side.

For people wanting to work in tech or the film industry, California is the place to be. And finally, the coastal areas tend to provide sunshine and warmth while the mountains are great places for people who want diversity in their weather. Before you pack up and move either into or out of the Golden State of California, let's break down the costs a bit more.

Housing Costs in California

As we stated earlier, the cost of housing in California is extremely high. Not only is the average house more expensive, but the average rent puts California in third place nationally. Of course, the further you are from the center of business, tech, or recreation, the lower the costs are. Conversely, you will pay more to get to your job, erasing any cost savings. Utilities are also higher based on the Energy Electricity Bill Report, adding to the housing costs.

Most Expensive Towns, Cities, and Zip Codes

Ten of the nation's 25 most expensive zip codes are in California. These include Atherton, Los Altos Hills, Palo Alto, Ross, Beverly Hills, Hillsborough, Hidden Hills, Woodside, Los Angeles, and Santa Barbara.

The most expensive cities over 10,000 in California are Santa Monica, Beverly Hills, Los Altos, Palo Alto, Burlingame, and Santa Barbara. The most expensive towns under 10,000 are Atherton, Ross, Portola Valley, Newport Coast, Belvedere, and Stinson Beach.

And of course, we cannot forget the most expensive metro area: the Bay Area including San Francisco. This is the most expensive metro area in the nation. The Bay Area is followed by the San Diego metro area and finally by the Los Angeles metro area.

Types of Housing Available

The cost of housing depends on what you want people to afford to buy. But regardless, even the most affordable option - mobile homes - are still expensive. In 2020, the average price of a single-wide was $91,900, while a double-wide will set you back $156,100. This does not include lot rental or property purchase.

Moving up to the next cheaper option, new modular home prices range from $54,900 to $1,832,200. New stick-built homes are far more expensive. Overall, the average cost for a home according to Zillow at present is $728,134.

The rent is not much better. Depending on the source, the average rent will set you back at least $1,800. All these numbers are averages, which means there are higher and lower amounts and these depend on location, size, and amenities.

The California Housing Crisis

Is there a housing crisis in California? Yes. And this housing crisis is increasing poverty and homelessness. California now has the highest number of homeless people in the nation.

Sadly, there is no simple solution. Many homeless people work productive jobs where the take-home pay isn't enough to provide housing. Poverty becomes a difficult-to-break cycle that trickles down for generations. Builders do not want to build affordable housing when they can build expensive housing.

The Transportation Costs

Transportation is always a big issue in the US. California is blessed with excellent public transportation around metro areas, but like all other states, public transportation in major cities is severely lacking in more rural areas.

The price of gas and diesel is currently the highest in the nation. Part of that is the highest gas prices are due to the many fees that are placed on gas purchases. Many of these are designed to maintain the infrastructure and cut down on environmental damage. California has a huge road infrastructure to maintain and as stated before, those who remember the smoggy, unhealthy air of the 1970s appreciate California's much cleaner sky.

Insurance is slightly higher than the national average in big cities, reflecting the sheer number of drivers and the dense urban areas. San Francisco is currently undergoing a rash of car vandalism including breaking windshields. All this adds to the cost of insurance.

And of course, there is the parking issue. Whether it is no parking in San Francisco or the $15 to $30 for daily parking in Los Angeles, just owning a car can be expensive, let alone driving it!

The less you drive, the cheaper it is to own a car. If you have the option, use public transportation or ride-share to keep down costs in California.

Food and Grocery Costs

Despite living in the fruit basket of the US, groceries are expensive in California. Everything must be transported, so that cost is figured into the overall cost of groceries. Grocery stores use a lot of electricity to keep buildings lit and food at proper temperatures.

Then, of course, the higher cost of employees through minimum wages is placed onto the consumer rather than being absorbed by companies. In addition, farmland is far more valuable as future subdivisions than it is as farm acreage. If you'd like tips on saving more money, when grocery shopping, check out this link.

Healthcare Costs in California

It might surprise people to learn that health care costs are one of the few places where California is not at the top or the most expensive. In fact, California ranks 16th in the nation, behind states like Alaska (#1), seven northeastern states, and North Dakota (#6). Compared to the US as a whole, California healthcare costs average $100 more a month.

However, in 2020, California healthcare costs were about $10,299 per person. Medicare recipients accounted for $13,000 per person per year because older patients tend to be more expensive to treat. Private insurance patients totaled about $5000 per year, reflecting that people with health insurance tend to be healthier.

Health care is expensive in more than just out-of-pocket expenses. The cost of treating unharmed people in jobs without health insurance hurts people with health insurance. Expanding health insurance options and even a one-payer system makes all people healthier and decreases the costs for everyone.

If you can not access medical care and do not have insurance, look into either Medi-cal or Medicaid. If you do have health insurance, do not be afraid to shop around for the best value.

Education Costs

Education costs can be divided into K-12 and college expenses. Sadly for those in K-12, the quality of schools is often based on the neighborhood you can afford to live in and whether or not busing is available and desirable.

California K-12 Costs

California ranks 36th in terms of per capita spending for K-12 education. It also spends only 3.1% of the gross state product on education, giving it a ranking of 41st in the nation. Compare that to 5.4% in Vermont, the highest amount spent. ALEC gives California a C overall for its education system, ranking the state below known scholastic underachievers like Tennessee and Arkansas, and even Louisiana.

California Higher Education

Tuition and fees are California Colleges are lower than the national average. Instate undergraduate tuition and fees average $3,873 per semester. The national average is $6,963.

Add on books and on-campus living and the average is $19,376 per semester, in line with the national average of $19,020 per semester. Out-of-state costs are astronomically higher.

These average prices might look good on paper, but for families already struggling to make ends meet with housing, transportation, and basic necessities, the cost for college quickly exceeds the family budget.

Depending on what you want from life, there are more affordable options to higher education. True vocational schools (not the for-profit "schools") can open doors into the trades, many of which have a far higher income than do jobs requiring college degrees. Apprenticeship programs are equally as valuable.

Community colleges are a good place to get your prerequisite classes out of the way before transferring to a more expensive four-year college. Online colleges are often far less expensive (just make certain they are accredited so you are not throwing away your money)

There are options. They just take stepping away from the hyper-focus on college as the only way up.

California Taxes

Everyone likes to gripe about taxes and how onerous they are. And they are. Who likes to give up money to see the government "waste" it? Presently, California ranks 7th in the nation for sales taxes, ranging from a base minimum of 7.25% to a maximum of 10.75%.

Income tax rates are also not as bad as they could be. California ranks 9th in the nation and does not come close to the highest income taxes rate.

Property taxes are all over the map when looking at California. The state actually ranks 35th in property taxes! Since property tax is based on the valuation of the property, Californians pay a lot in property taxes since the both housing prices and land prices lead the nation.

The median property tax costs in the San Jose metro area ($8,858) and the San Francisco metro area ($7,335) are number 2 and 3 respectively in the nation.

What do your taxes pay for in California?

It might help to realize what California does with all that money you pay in taxes. Revenue pays for the remarkable state park system; the education system; the first responders including fire, sheriff, and police; health services; environmental maintenance; roads; the employees of the state, county, and city needed to make the state, county, and city-run; court systems; libraries; national guard organizations; and public works. The monies also help keep the cost of public transportation down and go toward fighting climate change and the resulting flooding, drought, and fires.

Without tax money, everything listed above would come out of your pocket anyway but it would be far more expensive.

Money Saving Tips for California Residents

Here are some money-saving tips that could help California residents navigate the high cost of living:

1. Make a budget: Create a budget that includes all your expenses, such as housing, transportation, food, and entertainment. Stick to the budget and adjust it as needed.
2. Cut down on transportation costs: Consider carpooling, using public transportation, or biking to save on gas and parking fees.
3. Shop smarter: Look for deals and discounts on groceries, clothing, and other essentials. Consider buying generic or store-brand products to save money.
4. Consider moving to a more affordable area: If you're struggling to keep up with the cost of living in a particular area, consider moving to a more affordable area.
5. Use energy-efficient appliances: Energy-efficient appliances can help you save money on your utility bills.
6. Cook at home: Eating out can be expensive, so try cooking meals at home instead. You can also meal prep to save time and money.
7. Use credit responsibly: Avoid high-interest credit cards and use credit responsibly to avoid debt.
8. Find a roommate: If you're struggling to afford rent or a mortgage, consider finding a roommate to split the cost.
9. Take advantage of free entertainment: California has plenty of free activities and events to offer, such as hiking, beach days, and outdoor concerts. Take advantage of them!

Remember, every little bit counts when it comes to saving money. By implementing these tips, you can help ease the burden of the high cost of living in California.

FAQs

Our Conclusion

California is expensive. The cost of living leads the nation in terms of housing, transportation, and basic necessities. It can be very difficult to make ends meet and some people can be forced into poverty and even homelessness by trying to live in paradise.

If you need tips on budgeting, cutting costs, and paying off debt, browse through our blog. If you have too much debt and need help, Pacific Debt Relief can help with a FREE consultation!



*Disclaimer: Pacific Debt Relief explicitly states that it is not a credit repair organization, and its program does not aim to improve individuals' credit scores. The information provided here is intended solely for educational purposes, aiding consumers in making informed decisions regarding credit and debt matters. The content does not constitute legal or financial advice. Pacific Debt Relief strongly advises individuals to seek the counsel of qualified professionals before undertaking any legal or financial actions.