Cost of Living in California: 7 Things for Your 2024 Budget

How Expensive Is It to Live in California?

The California cost of living is among the highest in the nation, led by steep housing and transportation costs. While the strength of the economy in California can help alleviate the higher cost of living, it’s vital for residents and those considering living in the Golden State to understand living costs here. Strap in for an exploration of cost of living factors in California.

Quick Highlights

  • California’s cost of living is significantly higher than the national average due to factors such as expensive housing, high utility costs, and pricier groceries.
  • Transportation costs are also a major factor in California’s high living expenses, with residents facing the highest transportation costs in the country—though public transit can offer a more affordable alternative for some.
  • Despite the high costs associated with living in California, strategic planning can lead to finding affordable housing, and the state provides a range of employment opportunities in diverse and growing economic sectors.

California's Daily Cost of Living Breakdown

California Cost of Living Expenses

Renowned as the third-largest state in the US by square miles, California is significantly more expensive than most of the country, with living costs around 30% higher than the national average. The primary factors driving this higher cost of living are housing, food, utilities, and transportation, and these factors should be considered thoroughly before moving to California.

Housing costs top the list in California, with median home values and rent prices significantly surpassing the national average. Moreover, everyday expenses such as utility bills and grocery prices also run higher in California. It’s worth examining these costs in more detail.

Housing in the Golden State

Regarding housing costs in California, renters and buyers alike should expect high prices. Here are some examples of average rent prices in California:

  • The average rent for a one-bedroom apartment in California varies dramatically from around $1,500 to $27,000 per month, depending on location.
  • The median rent for two-bedroom homes in Los Angeles is around $2,300.
  • San Diego's median rent for a two-bedroom home is around $2,500.
California Median Home Price Comparison

Although the median home price in California is around the $800,000 mark, home prices in California vary greatly. Here are some examples of median home values in different cities:

  • Los Angeles: $945,000
  • San Diego: $900,000
  • San Francisco: $1,332,660
  • Sacramento: $475,000

As you can see, while some cities have extremely high housing prices, others offer the opportunity to afford housing more easily.

Utility Expenses

Living in California isn’t just about paying high rents or mortgages. The utility bills also pack a punch. Indeed, in California, the monthly utility bills are around 30% higher than the national average. Therefore, Californians typically face higher utility bills compared to other states.

To put it into perspective, California residents’ annual electricity bill averaged around $1,700 yearly. That’s a significant chunk of change and something to bear in mind when considering California's overall cost of living.

The California Public Utilities Commission provides in-depth breakdowns of electric and utility rates. 

Grocery Prices

Grocery shopping in California can also take a toll on your wallet. The average Californian spends around $370 per month on groceries. On the other hand, despite California's high cost of living in other areas, California is nowhere near the top 10 most expensive states for grocery costs.

Monthly Food Costs in California Comparison

And there’s a silver lining. By adopting smart shopping strategies, you can mitigate these high grocery expenses. Some strategies to consider include:

  • Opting for store brands
  • Buying in bulk
  • Seeking discounts or coupons
  • Using smartphone apps to compare prices and earn cashback

These strategies can all help to lower your weekly grocery bill.

Transportation Challenges

Transportation is another significant cost of living in California. It can add up quickly, especially with the high cost of gas and the constant need for a car in many parts of the state. In fact, transportation costs in the state are the highest in the country. California residents spend vastly more on transportation than the national average, and driving in Los Angeles, San Francisco, and other traffic-heavy cities can be even more expensive.

Transit Cost in California Comparison

But don’t let this deter you. California offers an extensive public transit network, which can be a cost-effective alternative to owning and maintaining a vehicle. However, for those who prefer the convenience of their own vehicle, it’s important to factor in the costs of gas and car insurance.

Public Transit Options

Public transit is widely accessible in California’s more urbanized regions, with services like buses, subways, and light rails available in urban areas. Inter-regional transportation options include services like CALTRAIN, which connects San Francisco to Gilroy and the suburbs in between. Metrolink in Southern California serves areas such as Los Angeles County, San Diego, Orange County, Riverside, and San Bernardino.

These services are considered to be an affordable means of transportation for many residents in California cities. Depending on your daily commute, public transit can be a cost-effective solution to the transportation challenges in California.

While many areas of the state don’t offer public transit for regular, daily use, public transportation in Los Angeles and other major metros is a convenient and viable option.

Driving Expenses

If you prefer the privacy and convenience of your own car, you’ll have to factor in the costs of gas and car insurance costs. The average gas price in California can be between $4.30 and $5.80 per gallon. That’s a considerable expense, especially if you have a long daily commute.

On top of that, California drivers pay an average of $2,700 for car insurance per year. So, owning a car in California can be quite an investment, adding to the overall cost of living.

Tax Burden in California

Taxation, including property taxes, is another critical factor to consider when calculating the cost of living in California. The state’s progressive tax system means higher-income individuals pay higher rates. California's statewide base sales tax rate is 7.25%, adding to the overall tax burden. Therefore, understanding the tax implications is vital for financial planning when living in California.

Healthcare Costs

Healthcare is another significant expense for Californians. Individual healthcare spending in California averages $7,600, slightly lower than the national average but reflecting an upward trend of around 4% growth per capita annually.

In addition, here are some key points to consider about California’s medicare program, Medi-Cal:

  • Medi-Cal’s spending per enrollee has been growing
  • This growth rate is faster than both private insurance and Medicare growth rates
  • Residents can expect significant healthcare costs, whether insured privately or through Medi-Cal

Finding Affordable Housing

Are There Affordable Homes in California?

Despite the high housing costs in California, finding affordable housing isn’t impossible. It just requires some strategic planning and a good understanding of the housing market. Selecting a location within California is a strategic move due to the wide disparity in housing costs across different cities and neighborhoods. 

Working with an experienced real estate agent can be incredibly beneficial. They can help you navigate the nuances of the market and find a home that fits your budget, whether that be in a rural region, a cheaper city like Sacramento, or one of Los Angeles’ most affordable neighborhoods. 

Moreover, it’s critical for those seeking affordable housing to understand the annual household income limits for different household sizes and income tiers, as set by the California Department of Housing and Community Development Division.

Employment Opportunities

When it comes to employment, California offers a wealth of opportunities. The state’s diverse economy encompasses sectors like agriculture, healthcare, tourism, manufacturing, and technology. These industries are all showing fast growth. In fact, the projected growth rate for total employment in California is estimated to be 3%.

Monthly Budget Using Average Salary in California and Median Home Price

So, while many people think about California’s entertainment industry—a major driver in the Los Angeles economy—there are many more thriving sectors in the state.

The state is also seeing rapid employment growth in roles such as solar photovoltaic installers, occupational therapy assistants, statisticians, medical assistants, and information security analysts. Plus, the highest-paying jobs in the state are found in the health, administrative, legal, computer, and mathematical fields.

Is California’s Cost of Living Worth It?

While the cost of living is undeniably high, proximity to California’s best beaches is worth the cost, evidenced by its status as the most populous state in the country. From high housing costs and utility bills to pricey groceries and transportation, the cost of living in the Golden State is significantly higher than the national average. However, with a deeper understanding of these costs and a strategic approach, it’s possible to manage these expenses and enjoy everything California offers.

Frequently Asked Questions

What is the average living cost in California?

The average cost of living in California is around $53,000 per year—making California one of the most expensive states.

How much does an average Californian spend on groceries weekly?

The average Californian spends around $370 per month on groceries. That's about $92.50 per week.

What are some strategies for finding affordable housing in California?

To find affordable housing in California, consider working with a real estate agent, choosing a strategic location, and understanding income limits for different household sizes and income tiers. These strategies can help you navigate the housing market more effectively.

Want to live in California? Call The Brad Korb Real Estate Group with LA Homes at (818) 953-5300 to find your dream home.

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