Living anywhere in the US costs a lot of money these days, but California is one of the most expensive states. In fact, only New York and Hawaii are more expensive. The difference between the 3 most expensive states and the rest is pretty big, as well.
Over the past two years, life in California has come to cost even more. With the price of housing going up, the price of rent going up, and record inflation, how much longer will California be an affordable place for the average American to live?
It’s not all bad though. If you manage to find an affordable place to rent, the cost of renters insurance in California is low. And with high income potential, you could make enough money to lower the impact of inflation.
There is actually evidence that California may soon become more affordable as well. Here is why.
Rent might be going down
Rent in California is more expensive than anywhere else in the country. The average Californian pays $2,542 a month, significantly more than the national average of $2,016. In cities like San Francisco and Los Angeles, you’d be lucky to get an apartment for anything close to $2,542 a month.
Rent has been increasing throughout the US over the past few years. However, recent reports show that rent in parts of California actually decreased in July. That decrease amounts to between $4 and $21 a month, depending on the city, but it is the implication that matters. If rent has stopped increasing and may even be going down, California will become a more affordable place to live.
Housing prices are dropping
If you want to buy a home in California, you’re probably going to have to spend over $800,000 for a single-family home. This is over $300,000 more than the national average. With mortgage rates high, few families can afford to buy California homes right now.
However, home prices in California are finally dropping. They dipped 3.5% in July, which amounts to $30,000. Most people still cannot afford to buy a home, but the downward trend may be good news.
A housing market crash does not look likely, so we can see the positives in these dipping prices. If you’re not able to afford a home in California now, you may be able to in the future. Since interest rates will not stay this high indefinitely, paying off a mortgage will become affordable once again.
There are also projects in the work to make affordable housing in California available.
Wages are increasing
People working in California have seen significant wage increases in 2022, which is more good news when it comes to the affordability of the state. Aside from the increases in minimum wage, average salaries have increased by more than 6%. This too is higher than the national average which sits at under 5%.
The problem in 2022 is that the increase in wages is below the rate of inflation. So, while you may have received a significant pay bump, you may still find yourself struggling more than you did a year ago.
However, the trend is important. That California wages are consistently increasing more than the national average bodes well for the future, even if you don’t feel the benefits at present.
There is no known end date for the current inflation crisis. It’s not going to go away for a while (and may even get worse). But it will not last forever. At some point, inflation will start to go down. With increasing wages, California will become more affordable once again.
While things don’t look good in California because of inflation, that is true everywhere else as well. Californians may be in a better position to cope, seeing as they have received bigger salary increases.
The above reasons are all indicators that California may become more affordable over time. While things are currently getting prohibitively expensive, that trend will not last forever, and consistent salary bumps will see many people through the worst of it.