California is widely known for its high taxes and expensive living conditions. We look to see if it’s accurate and why it is.
California is a center of business, entertainment, and technology that attracts people from all over the US. However, it’s still an expensive place due to factors like the median income and the average price of the property.
5 Reasons Why California Is So Expensive
California is rich culturally, with solid infrastructure and one of the best living standards. Consequently, it’s no wonder it’s one of the most expensive states.
Let’s take a look at a few common reasons that make California such an expensive place to live:
1. Housing Supply and the Rising Demand
Since California attracts many people who would like to enhance their standard of living, there’s a high demand for housing, be it ownership or rentals.
With low supply and high demand, owners begin to give property to the highest bidder, which makes the cost very high. As a result, it’s estimated only 16% of households in California can afford a median-price home in the state, but it doesn’t stop there.
California has a strong economy with plenty of major corporations. It sounds great, but it also affects the high tax rates. The spillover effect of taxes can affect all aspects of life within a given area.
For example, a shop owner would need to add a higher margin to the products they sell to cover the rent in an expensive area. Then, the cycle goes on and on.
2. Car Ownership, Gas Prices, and Transportation
Although you’ll find some decent bridges and road networks to drive in California, owning a car isn’t exactly a minor expense. Of course, that applies everywhere, but in the Golden State, the gas prices are usually higher than the national average.
Remember that you might have to top the gas costs with regular car maintenance, insurance, and parking fees, depending on where you live.
Yet, a lot of people opt to get cars. There are 35.3 million vehicles in the Golden State. If you do the math, that’s around1.3 cars for every licensed person in California!
So, what if you ditch the car and resort to public transportation? Yes, you might save some bucks if you opt to take the bus or the subway. You might even be going for the green option here!
However, the expenses of taking public transportation can still add up by the end of the month if you depend on it for regular commutes to work and back home. It might also be a bit inconvenient sometimes, especially during rush hour.
LA’s Rush Hour Showdown: Car vs. Train
3. High Average Incomes
It’s not all that bad in California, though. With the booming business, plenty of good job opportunities pay well. The average salary per year is around $68,510. Remember that this estimate is based on full-time and part-time jobs.
To put things in perspective, the average national salary per year is around $58,250, which puts California at a pretty good rank. It also explains why so many people would like to move and work here, bringing us back to the cycle of accelerating prices and housing demands.
Still, the fact that plenty of wealthy people live there makes the willingness to pay for goods and products higher. This disparity might leave more people struggling to make ends meet.
4. Silicon Valley’s Impact
Silicon Valley is undoubtedly one of the priciest places to live compared to global standards. That’s predictable, though. After all, many tech jobs pay quite handsomely, which takes a toll on the rising cost of essentials like food and rent.
While you might think this effect is localized, its impact ripples into the rest of the Golden State. That’s mainly because people sometimes opt to live in further neighborhoods and commute to work daily.
5. Population Influxes
It might be nice to live somewhere that’s trendy. However, when we’re talking about intense increases in population in short periods, we have to think about the strain it puts on the city’s resources and infrastructure.
This effect causes the prices to rise to maintain the same high quality that makes the destination attractive in the first place. As a result, the state becomes a bit more expensive for the locals.
5 Reasons Why People Still Choose to Live in California
Despite the high cost of living, California is still a hotspot for people looking to relocate or spend their vacation days. Why is that? Endless reasons push people to visit California, from its natural scenery to the booming job market.
Any one of these reasons can be a double-edged sword since tourism adds a lot to the state’s economy, but it also raises the bar for the prices of various products and services.
Regardless of whether you see this compound economic effect as a pro or con, let’s take a look at the top reasons that keep the influx to California going almost all year round:
1. Travel Destination
California is notorious for its touristic landscapes. So, a lot of people visit to try any of the famous activities, from desert drives to chilling on the sandy beaches. This makes the state a particularly lucrative destination for hikers, cyclists, and surfers.
Besides the natural aspects, there are plenty of recreation and cultural exploration opportunities.
2. Entertainment Hub
Yet, another appeal that drives people to California is that it’s one of the hottest entertainment hubs in the nation. It’s the heart of the world’s film industry with spots like Los Angeles’ Hollywood.
So, it’s no wonder many aspiring young actors, musicians, and writers would relocate to California to give their talents a shot. Other people move here to enjoy the shows and appreciate the art.
3. Great Weather
One reason that attracts people to California is its amazing West Coast weather. It’s typically warm and sunny, and you’ll hardly ever find the temperature going below 32°F or rising above 100°F.
Naturally, this mild and inviting weather draws people and businesses to settle in California.
4. Low Crime Rates
Another reason many people find California a dream living spot is because it has a low crime rate compared to many other states. The number of reported incidents is as low as 428 per 100,000 people as of 2020.
Of course, some places will have higher crime rates than others. Take, for instance, how car break-ins are a common issue in San Francisco. Yet, overall, it’s not common to feel unsafe walking down the streets in California.
5. Booming Job Market
Bear in mind that it’s not just Silicon Valley that’s attracting the workforce. With the rapidly growing economy and increasing businesses, the robust job market is also bringing in many local and global immigrants.
Most affordable houses in California
California’s average housing affordability index is 16%, but this figure can easily shift depending on the supply and demand in different counties and cities.
If you’re looking to relocate to the Golden State on a tight budget, you might want to check a few places with affordable housing, including:
Meanwhile, there are a few other spots where houses can be a lot more inaccessible to many people:
- Alameda
- Napa
- Orange
- San Benito
- San Luis Obispo
- Mono
- Santa Barbara
California’s Cost of Living FAQs
Let’s take a look at some frequently asked questions regarding California’s expenses:
What states are more expensive than California?
If you’re ordering the 50 states by the average cost of living, California comes pretty high on the list. Yet, it’s not the only (or the most) expensive place to live in the United States.
Here are a few states that can top California’s cost of living:
New York
Washington
Colorado
Alaska
The differences between living expenses in these states and California aren’t significant. So, you might want to narrow down your relocating options using other factors like the job market or the weather.
What are the highest-paying jobs in California?
When we imagine high-paid jobs in the Golden State, it’s evident that actors, dancers, musicians, directors, and other creatives will pop into mind. Tech jobs are also well paid in California with the buzzing Silicon Valley.
However, other fields can make a decent living, too. According to the Bureau of labor, surgeons, physicians, nurses, airline pilots, and animal scientists are among the state’s top-ranking take-homes.
References
- 16% of households: prnewswire.com
- Higher than the national average: kqed.org
- 35.3 million vehicles: lao.ca.gov
- $68,510: bls.gov
- 428 per 100,000 people: ppic.org
