California has long been known for its sunny beaches, vibrant cities, and booming economy. But it’s also famous—or perhaps infamous—for its high cost of living. Whether you’re planning a move, considering a career change, or just curious about the numbers, understanding the real expenses here is essential before making any decisions.
From skyrocketing housing prices to rising utility bills, the cost of living in California affects nearly every aspect of daily life. Yet, there are ways to navigate these costs and even find areas that offer a better balance of affordability and lifestyle. Let’s take a closer look at what living in the Golden State really costs in 2025.
Housing and the California Cost of Living
The biggest driver of California’s cost of living is housing. Overall, living in the state is about 45% more expensive than the national average. This means someone earning $60,000 elsewhere would need around $87,000 to maintain the same standard of living here.
California tops the nation in housing costs. According to Forbes, the median monthly housing cost is $2,111, and homes are among the most expensive per square foot. Median mortgage payments are also sky-high, averaging $4,442 per month, second only to Hawaii. Median home prices vary significantly by city, from $1,015,000 in Los Angeles to $1,483,000 in San Francisco. Meanwhile, Sacramento offers a more affordable median of $490,000.
For renters, the picture is just as varied. The state’s average rent is about $1,956 per month. In Los Angeles, a one-bedroom averages $2,746, and in Malibu, nearly $3,895. Sacramento’s rent is lower at $2,226, while Fresno offers one-bedroom apartments around $1,650. San Francisco remains the most expensive rental market at $3,724 for a one-bedroom.
Utilities and Rising Costs
Utilities are another key factor in California’s cost of living. Monthly bills are about 38% higher than the national average, including roughly $148 for electricity, $63 for natural gas, and $76 for water. While these numbers may seem manageable now, estimates suggest electricity and gas bills could reach $280 to $420 per month by 2030.
The state is actively transitioning toward clean energy, aiming for 100% renewable electricity by 2045. With more than half the goal already achieved, this shift may influence utility costs in the long term. While higher utility bills are a challenge, many residents see the investment as part of California’s broader environmental initiatives.
Groceries and Food Costs
Despite the high housing and utility costs, groceries are comparatively reasonable. Californians spend about $370 per month on groceries, only slightly above the national average of $350. Thanks to the state’s extensive agricultural industry, food costs don’t make the top ten most expensive lists, meaning your grocery budget can remain manageable even in high-cost areas.
While dining out in cities like Los Angeles and San Francisco can be pricey, home-cooked meals and smart shopping can help keep grocery costs under control. Seasonal produce and local markets often offer better deals than larger chains, helping balance the high cost of living in other areas.
Transportation and Travel Expenses
Transportation costs in California are significant. Gas prices consistently exceed the national average, currently averaging $4.68 per gallon compared to $3.08 nationally. On average, Californians spend $6,597 per year on transportation, second only to Hawaii.
Public transit can provide some relief. San Diego offers a monthly transit pass for $72, Los Angeles has a $1.75 fare cap, and San Francisco’s Clipper pass costs $104. Still, most residents rely on personal vehicles, meaning additional expenses for gas, maintenance, and insurance. Car insurance averages around $1,800 per year, higher than the national rate.
Choosing where you live can significantly affect transportation costs. Coastal cities with heavier traffic and longer commutes generally cost more, while inland areas like Sacramento and Fresno offer lower daily commuting expenses.
Taxes and Financial Considerations
California’s progressive income tax system ranges from 1% to 12.3%, depending on income level. The median household income is about $95,521, translating to roughly a 6% income tax for individuals earning around $49,600. The statewide base sales tax is 7.25%, while the average property tax rate is just 0.71%, which is lower than many other states.
While income and sales taxes are high, property taxes are more manageable. Combined with strategic financial planning, residents can balance these costs and take advantage of California’s high property value growth potential.
Healthcare Costs in California
Healthcare is another essential part of the state’s cost of living. On average, Californians spend $480 per month on health insurance. Costs can vary significantly depending on age, provider, and coverage. For those who qualify, Medi-Cal and Covered California programs help make healthcare more affordable.
California is home to many top-tier hospitals and medical facilities, especially in urban centers. Access to quality healthcare adds value for residents but is another factor to consider when planning your budget in the state.
Finding Affordable Options
With high costs across housing, utilities, and transportation, finding affordable living options in California requires strategy. Coastal cities are generally the most expensive, while inland areas like Sacramento, Bakersfield, and Fresno offer more budget-friendly options without sacrificing quality of life.
Working with an experienced real estate agent can make a substantial difference. Agents understand local market trends and can help locate homes or rental units that fit your budget and lifestyle priorities. Flexibility and research are key to making California’s high cost of living manageable.
Why California Costs So Much
The high cost of living in California is primarily due to supply and demand. Many people want to live here because of the weather, opportunities, coastline, and overall lifestyle. Housing supply has not kept pace with demand, slowed by zoning restrictions, limited land availability, and high construction costs.
As residents earn higher wages, the market supports elevated housing prices, creating a cycle that sustains high costs. While the expenses can be daunting, the lifestyle, opportunities, and cultural richness of California continue to draw new residents each year.
Making California Work for You
Despite the steep costs, California offers opportunities and experiences that few other states can match. By understanding your budget, prioritizing locations, and planning strategically, you can make living in California financially feasible.
Whether it’s selecting an inland city, leveraging public transportation, or carefully planning home purchases, a thoughtful approach allows residents to enjoy the Golden State without being overwhelmed by expenses. With the right strategies, California can be both affordable and rewarding.
Frequently Asked Questions about the Cost of Living in California
Is California the most expensive state to live in?
California is one of the most expensive states, especially for housing. While some states like Hawaii and New York have higher costs in certain categories, California ranks near the top overall.
What cities are most affordable in California?
Inland cities like Sacramento, Bakersfield, and Fresno offer more affordable housing and lower overall living costs compared to coastal cities like Los Angeles, San Francisco, and San Diego.
How much should I budget for utilities in California?
The average utility bill is about $287 per month, including electricity, gas, and water, but this is expected to rise in the coming years as energy costs increase.
Are groceries expensive in California?
Grocery costs are slightly higher than the national average, at roughly $370 per month, but are generally manageable compared to other living expenses.
Can I rely on public transportation to save money?
Public transit is available in many cities, but most residents use personal vehicles. Depending on where you live, transit can save money, but it often doesn’t fully replace car expenses.
What is the typical healthcare cost in California?
Average healthcare costs are around $480 per month for insurance, though programs like Medi-Cal and Covered California can make coverage more affordable for qualifying residents.
