California seems to have some unique advantages: many people choose to settle here because of the favorable climate, convenient living, abundant job opportunities, diverse culture and languages, etc. However, with the implementation of various extreme policies, especially the impact of post-pandemic inflation, the cost of living for Californians is getting higher and higher.
What is the current situation of some major living costs for Californians? The Public Policy Institute of California (PPIC) conducted a survey and research on this, coming to conclusions from five aspects.
Housing costs in California remain high, whether buying or renting, housing costs are the biggest expenditure for living in California. According to the personal finance website “WalletHub,” after comparing 10 key indicators of 300 cities in the United States, it was found that 16 of the top 20 cities with the highest cost of living in the United States are in California, mainly due to the high housing prices.
In comparison to the national median house price of $414,000, the median house price in California in May reached a historical high of $900,000. Of course, in some extremely northern areas, houses can still be found for $300,000; but in some areas of the San Francisco Bay Area, the median house price has exceeded $2.2 million.
PPIC researchers believe that over the past 30 years, the housing supply in California has plummeted, leading to soaring house prices. Moreover, the percentage of renters in California and the rent are higher than in other parts of the United States, with an average monthly rent of $2,770, even more expensive in some coastal cities.
In terms of home insurance, before entering a winter stalemate in 2023, California’s home insurance had been relatively cheaper. However, with the disruption of the insurance market stability, home insurance premiums began to soar, and residents in some high-risk wildfire areas may even be unable to obtain insurance or renew their policies.
Food expenditure is a family’s most important fixed expense, and Californians spend almost more per week on groceries than in all other states: according to the U.S. Census Bureau, the average weekly expenditure on food and groceries for California households is about $300.
PPIC research found that for low-income Californians, expenditures on basic needs such as food, housing, transportation, and healthcare account for 80% of their household expenses.
Californians have long been paying the highest oil prices in the United States, as well as higher water, electricity, and natural gas bills.
According to data from the American Automobile Association (AAA), the average price of regular gasoline in California on June 22 reached $4.66 per gallon, $1.44 higher than the national average. Additionally, every July, California gasoline taxes automatically increase once. Currently, the California gasoline tax is about 60 cents per gallon, the highest in the United States, not including additional costs and environmental surcharges.
Experts point out that gasoline prices are usually determined by five factors: crude oil prices, refining costs, distribution and marketing, taxes, and regulations. In California, only taxes and regulatory costs exceed $1.3 per gallon, nearly double the national average level.
PPIC researchers found that in recent years, energy prices in California have also risen significantly. California’s electricity prices have always been higher than in other states. For homeowners and renters, the proportion of water and electricity bills in household expenses is higher than ten years ago, and the rate of water bill increases in many areas even exceeds the inflation rate. Due to aging infrastructure and new water treatment standards, water bills may continue to rise.
The good news is that PPIC researchers believe that tuition fees for public universities in California are reasonable. Although tuition and fees across the United States are rising, tuition fees at California public universities are lower than in most other states, and half of undergraduate students can receive scholarships from state or local governments. However, paying for university tuition not only involves tuition fees, but families must also consider the aforementioned daily living expenses.
Most Californians have health insurance. Overall, personal healthcare expenditures for Californians are comparable to those in other parts of the United States.
Based on the five conclusions above, PPIC believes that working families in California may be able to cope with some higher costs, but retirees face more pressure. Therefore, some Californians are considering moving to states with lower cost of living to have a higher quality of life.