New CA studies give a cut in the extremely high cost of living

from Dan WaltersCalMatters

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We Californians know, or should know, that while living in this state has many positive aspects, we pay through the nose for the experience.

Multiple recent studies show how deep Californians have to dig to meet costs of living that are at or near the highest of any state.

One comes from the Office of the Legislative Analyst, the Legislature’s adviser on the state budget, delving into the astronomical cost of buying a home.

The LAO survey found that “California home prices far exceed the rest of the country.” Middle-class housing, those roughly in the middle of the price range, is more than twice as expensive as typical middle-class housing elsewhere in the US. Monthly payments for such homes are about $5,500 in California, 74% more than they were 25 years ago.

The study also found that the annual household income needed to obtain a mortgage on a median home in California in September was about $221,000 — more than double the median household income in California in 2024, which was $102,000.

An entry-level home requires about $136,000 in annual income to qualify for a mortgage — about 33% higher than the median household income in 2024.

The data illustrates why California has the second lowest rate of home ownership in the nation. Only 55.3% of Californians live in homes that they or their families own, which is slightly higher than New York’s ownership rate.

Not surprisingly, hundreds of thousands of Californians who cannot aspire to home ownership are abandoned for more affordable countrieslike Texas where home prices are a fraction of those in California.

Those who migrate to other states find that not only are houses much cheaper, but the fuel for their cars and the utilities to light, heat and cool their homes are significantly cheaper.

The Center for Jobs and the Economy, an offshoot of the California Business Roundtable, continuously monitors energy costs in California and other states. His last report says gas is averaging $4.64 a gallon in California to $1.50 a gallon higher than in Texas and other states. Electricity prices in California are roughly twice as high.

Another take on the cost of living in California comes from the Transparency Foundation, a conservative economic think tank.

He pulled together a wide variety of factors and calculated the cost of living for an upper-middle-class California family with an annual income of $130,000. It’s over the family will pay $29,753 more per year than the national average for housing, utilities, health care, taxes and other living expenses.

“This report should be a wake-up call to all Californians that they are being unfairly penalized by bad policies forced upon them by their politicians — and they are literally paying the price,” Dave McCulloch, the foundation’s president, said in a statement about the report.

A a new study by the Public Policy Institute of California confirms that Californians are worried about the cost of living. Nearly a third of respondents said that they or someone in their household have reduced food purchases to save money.

The California Farm Bureau revealed this week that a traditional Thanksgiving dinner for 10 people next week will costing a California family $72.61well above the national average of $55.18.

Finally, there is a new report from WalletHubwebsite dedicated to personal finance, suggesting that Californians are taking on more debt to pay their mounting bills.

In the third quarter of this year — from July to September — the average California household added $880 in new debt, bringing total debt to $259,773, second only to residents of Hawaii.

Overall, Californians’ personal debt increased by $11.8 billion during the quarter. It is now close to $3.2 trillion, slightly less than their annual personal income of $3.6 trillion.

A truly staggering number.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.