Why Is California So Expensive: What Are The Reason?

California is undoubtedly one of the most astounding states. The amazing housing facilities, income tax, and strong economy make it really expensive one!

It is estimated that the living cost here is 39% higher than the whole national average. You need to pay a hefty amount of tax in California. The wonderful landscape, warm climate, and city life will make your life merrier here.

However, you need to spend a lot to enjoy all these!

Keep reading to know the answer to “Why is California so expensive?”

All About California

California is the home of wonderful cities like Los Angeles, San Francisco, and San Diego. It’s a very popular tourist destination. From beaches to deserts, California has everything.

This is the place where Disneyland was built. Many film industries and celebrities live here. As a result, people are always eager to visit and the tourism of California always stays top-notch. Here, the demand is more, and the supply of resources is less. Housing, groceries, and land are pretty costly to afford.

Why is California so expensive?

Both cities and inland are expensive in California. It is because of a number of reasons. Go through the points to know!

High Tax Rates

As a resident of California, you will have to pay taxes on a lot of things. If you compare the tax rate of it with other states, it ranks 4th. The list includes gas tax, local tax, property tax, income tax, sales tax, and whatnot.

Costly Health Care System

This state has some exclusive medical prescriptions, procedures, and equipment. If you compare the population of California with other states, it has the oldest population. They provide the required medical facilities to older people. Hence the entire healthcare system is expensive.

Environmental Regulation

California has strict emission standards. That’s why if you want to live here, you need to use differently built expensive cars with cleaner burning engines. In the case of fuel distributors and oil refineries, there are also strict laws.

High Paying Jobs

Companies in California offer a high salary to their employees. It amplifies the cost of consumers. When you have a high-paying job, you tend to spend more on luxuries. Thus, it directly affects the economy

Demand and Supply of Groceries

As this state has a high population, the demand for groceries is always high here. Since people spend more money on food, the demand for groceries always stays on top. However, the supply is less considering the demand.

Why is California the richest state in the US?

California is one of the richest states in the USA. It stands 5th. The GDP per Capita of California is $89,540. You can get amazing housing and medical facilities here.

The economic structure of California is very diversified. This place is the home of entertainment, technology, research institutions, corporates, and reputed universities. California has the best tourist spots. The people who live here are super rich. All these make California one of the richest states in the USA.

When did California become so expensive?

California started having a gold rush in the 1850s. Between 1970 and 1980, housing prices in California started to rise. It came to a point where the price was 80% higher than the average US level. After the pandemic, just like the whole world, the cost started becoming higher. Now in 2023, it has become too expensive for all.

Why are people leaving California?

People are leaving California because it has become expensive for them to afford now. After the pandemic, the financial condition of people has changed. On one side, they lost jobs or their income has significantly reduced.

On the other hand, the price of daily necessities has increased. Additionally, they have to pay a high amount of taxes regularly. For this reason, people are leaving California.

What state is like California but cheaper?

Texas is like California but cheaper. You will be amazed to know that Texas has no income tax. The cost of living is low too. Texas’s climate is almost similar to California’s. The landscape is as amazing as California.

You can spend your money on things you like. Starting from food to entertainment, Texas has everything like California at a much cheaper rate. Owning your own house is affordable in Texas whereas in California you need to pay a heavy toll. You may find Texas as the dupe of California.

Why are celebrities leaving California?

California has been significantly connected to the entertainment industry from its inception. However, celebrities are now leaving this state and studios are relocating. The main reason behind the celebrities leaving California is the high tax. They are paying high taxes with high living costs. As a result, take-home pay notably reduces.

Again, if you look at the tax incentives, the range is very limited. If celebrities want to apply for tax credits, they have to go through a very complicated application process. Since the bureaucracy is tight here, celebrities have to take a huge toll on them to get approval for productions. It increases production and studio cost. That’s why celebrities are leaving California.


California is undoubtedly one of the most expensive places in the USA. However, the expenses are totally worth it. You will get the best services and facilities here. These will fulfill your daily necessities and cater to your need for relaxation too. For all these reasons, California is so expensive.

Hopefully, this guide helped you!

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