Reasons abound why California is so expensive which cuts across high tax rates, high demand and low supply, and housing, among other factors.
This article discusses in detail the reasons why California is so expensive, and why is so popular, among other relevant information about the state of California.
Why Is California So Expensive?
California is so expensive because of the high tax rate, and limited housing, among other factors.
Let’s now extensively discuss the major reasons why California is so expensive.
1. High Tax Rate
California is known to be on the top list of states with the highest tax rates in the United States.
According to recent statistics, the average property tax rate is 0.73%, the sales tax rate is 7.2%, and the top marginal rate of 12.3%.
Speculations have it that the tax rate of California is expected to increase progressively in the coming years.
2. High Gas Prices
California is known to have one of the highest gas prices in the United States.
There’re strict fuel regulations that help to reduce pollution hence, responsible for the rise in the cost of a gallon of gas by 17 cents.
Additionally, California has fewer gas stations and refineries than most states in the United States thus leaving consumers with fewer options in cases of artificial inflation in prices.
3. Housing
There’s a high cost of housing in California which is speculated to be caused by the high demand for land and houses in the major cities of California which is matched by low supply.
Therefore, the few available houses in the desirable parts of California are costly and rents are very expensive.
On the other hand, there’re also strict zoning laws and regulations also contribute to limited and expensive housing.
4. Strict Building Regulations
There’re many strict building regulations in California that make building a house in California very expensive.
Furthermore, the cost of land in California is very high thus making it more expensive to erect a building.
5. High Demand And Low Supply Of Land
California is densely populated without a corresponding availability of land for housing.
Thus, the unmatched availability of land for housing with the population of people in California creates a high demand for the limited land available thus resulting in high prices in the cost of land for housing and a general increase in the cost of living in California.
6. High Transportation Cost
As discussed earlier, the price of gas in California is very high which results in an increase in the cost of transportation hence making the cost of living very expensive in California.
7. High Car Insurance Cost
California ranks among the top five most populous states in the United States with an estimated total population of 40 million people.
However, each household in California spends an average of $2,053 on auto insurance which is pretty expensive.
8. Increasing Cost Of Education
California is known as one of the states with the cheapest cost of high school and college tuition fees in the United States.
However, in recent times, California has recorded an increasing cost of high school and college education fees, especially for international students thus resulting in an increased cost of living in California.
9. Higher Wages
There’s an influx of migrants in California who’re in search of greener pastures because of sufficient availability of jobs and higher wage in the state.
On the other hand, the starting wage for technology in California is over $50 an hour which is considered one of the highest in the United States.
When business owners pay high salaries and wages to their employees, they inflate the prices of their goods and services which contributes to the reason why California is expensive.
10. Favourable Weather Conditions
California has one of the most friendly weather conditions in the United States with an average of 310 days of sunshine yearly.
This friendly weather condition in California makes the state very attractive for business people and tourists thus contributing to the expensive cost of living in California.
Is California Really Expensive To Live In?
Yes, California is comparatively expensive to live in to other states in the United States.
Additionally, utilities are 27% higher, housing is 96% higher than the national average, other necessary amenities are 10% higher in California than in other states and generally, the cost of living in California is 41% higher than the national average.
Is California The Most Expensive State To Live In?
No. New York is the most expensive state to live in in the United States followed by California.
Before We Go
California is one of the most popular, beautiful, and populous states in the United States with a population of over 40 million people.
The cost of living in California is very expensive due to a lot of factors some of which are; higher tax rates, high gas prices, and housing, among others factors.
This article explores in detail the reasons why California is so expensive to live in and other information about the state of California.