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Why is California Expensive?

Why is it So Expensive to Live in California in 2023?

California is arguably one of the most beautiful states in America. The great state has all aspects of nature, from beautiful sandy beaches to the Sierra Nevada Mountains to the Mojave Desert and the City of Los Angeles.

Because of this, many people want to move to California only to encounter the realities of the high cost of living.

So, why is it so expensive to live in California in 2023, and has it always been this expensive?

California is so expensive because the average cost of living is very high. Essentials such as groceries, housing, utilities, transportation, and health are far more costly than in other states.

What is the reason behind the high rates of everyday necessities in California? read on to find out more about the bitter-sweet side of life in California.

Is California Really Expensive to Live In? 

According to World Population Review, California has the country’s third-highest cost of living index. House prices are extremely high due to high demand and low supply.

Transport costs in California are the second-highest in the country, primarily due to the sky-high gas prices.

For comparison purposes, on a national scale, a two-bedroom apartment costs an average of $1164 a month. In California, this figure shoots up to %1614. 

When Did California Become So Expensive? 

California is the land of dreams. Hollywood, Disneyland, and Silicone Valley, to mention a few, are all found in this state.

Many people move to California from all over the world to chase their dreams of either becoming Hollywood stars or to make it big in tech. Unfortunately, not much has changed in decades regarding housing density.

The influx of people and the available housing options don’t match up. This imbalance has led to a spiraling homelessness problem in the state. 

Cost of Living in California Per Month 2023 

The average cost of living in California for a two-parent family where one of the parents doesn’t work would be $1,568 for housing, &773 for food, and $428 for transport.

A single adult living alone would fork out $1046 on accommodation, $268 on food, and $2798 on transport. 

Is California Expensive for International Students? 

California is expensive for international students. Though rates differ from city to city, California is more costly compared to most states.

In San Diego, average living costs amount to about $1700 a month, not including school expenses. Sharing a room with a trusted roommate can help ease rent costs, but for new international students, this may be hard.

Why is The State of California So Expensive? 

California beach

1. Housing Shortage

California has a housing problem. Both affordable and high-end houses are in short supply, leaving thousands of people who move here yearly at a significant disadvantage.

The effects of the shortage are extremely high rental and purchase prices of existing housing units and homelessness.

Housing costs account for a large percentage of living costs, thereby leaving residents with little expendable cash for utilities.

2. Exorbitant Gas Prices

California has the most expensive gas prices in the country. This is mainly due to the high taxes charged on gas.

Furthermore, California has a special requirement for a more environmentally friendly gas blend to reduce greenhouse emissions.

This requirement adds extra costs to gas production, which are then passed on to the consumer.

3. High Taxes

California has one of the highest taxation rates on income in the country. Ranging from 1% to 13%, the taxation system is designed to relieve pressure from lower earners and distribute the burden more on high-net-worth individuals.

Most people hail the plan as progressive. However, comparing paychecks between California and other states shows a big difference that leaves workers digging deeper to meet their monthly living costs.

4. Land of Opportunity

Many people looking to leave their hometowns have California as a preferred destination. California has something for everyone, whether it’s business ventures, schools, or fame.

Hollywood is a central attractive point for aspiring actors and actresses. Silicone Valley calls in all tech prodigies, and world-renowned universities are a favorite with international students.

Resources such as affordable housing and low-skill jobs become harder due to competition.

5. Groceries

Groceries are a non-escapable utility cost in daily life. Compared to the other states, groceries cost way more in California. Maybe not so surprisingly, housing costs affect grocery stores.

Due to high real estate costs, groceries in major California cities are highly-priced to offset the costs. Other factors contributing to high grocery costs are high labor costs. 

Most Expensive City in California 

San Francisco is the most expensive city in California, second only to New York. Additionally, out of the ten most expensive cities in the US, California clinches five positions, indicating the overall high cost of living in the entire state. You would need an income of $119,000 to live well in San Francisco.

Why is California Housing So Expensive? 

Housing in California is expensive
Aerial shot of suburban tract housing near Santa Clarita, California

There are many varied reasons why housing is so almost unattainable in California. 

One of the main reasons is low supply. There aren’t enough houses in California cities to accommodate the demand of the local population, not to mention the people moving there in search of greener pastures. 

Additionally, California’s single-family zoning law had restricted many areas and hindered the construction of high-density homes that would offer more options to buyers and renters.

As of January 2022, the law has been rescinded. Hopefully, this will ease the high rates of owning a home in the state.

Lastly, Proposition 13 was enacted in 1978 to protect elderly property owners from unexpected rises in property prices. Despite many advantages to homeowners, the regulation has contributed to the shortage of homes due to decreased housing turnover.

It has also discouraged house sales and encouraged empty lots to stay undeveloped for long periods. 

Related: Why is New York State So Expensive to Live in In 2023?

Is California or New York More Expensive? 

On average, New York is more expensive to live in compared to California. House rents are higher, and so is daily utility spending.

However, more California cities are on the higher spectrum of the sky-high cost of living. Transport is way cheaper in New York compared to the high gas prices in California.

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