California is home to some of the most expensive markets in the US. According to a recent survey from Finder.com that analyzed the cities with the highest cost of living in the nation, California was home to four of the top five cities on the list, San Francisco, San Jose, Los Angeles and San Diego. Was the only city in the top five that was not in California. It ranked third on the list.
“There are a lot of factors that go into determining how expensive it is to live in a certain area. Cities in California might be showing up on our list more often for a few reasons, including supply and demand of homes, expensive home values, and high costs for other non-housing expenditures, like car insurance,” Britny Lawhorn, assistant publisher of mortgages at Finder.com, tells GlobeSt.com.
San Francisco ranked at the top of the list, requiring the highest salary in the nation to live comfortably. Prospective homeowners would need $206,760 to buy a home in the market. The market ranked first in 2018 as well, the last time the survey was conducted; however, the cost of living requirement was down 6.84%. Neighboring San Jose ranked second on the list, the same rank it held in the 2018 survey. The market also had a reduction in average cost of living since 2018, down 15.59%. Los Angeles ranked fourth on the list. The cost of living was down only 1.94% since 2018, and the market held the same ranking. San Diego, on the other hand, moved up three spots since 2018, from eight to fifth place. Still, the cost of living was down compared 2.86%.
Interestingly, the cost of living requirements decreased in each of the top five markets. Housing costs largely drove the cost of living in these markets, and while these costs have increased, other costs have stagnated. “While there are many factors that determine cost of living, our study showed that while average non-housing expenditures and non-mortgage debt didn’t show significant changes, the average interest rate across the board decreased,” says Lawhorn. “For certain areas, lowering the average interest rate by even 1% could mean a huge difference for borrowers’ monthly mortgage payments.”
While these markets require a high cost of living, most residents are not meeting the minimum income requirements. “There is absolutely a gap between the income needed to live in certain high-cost areas and the median area income. Take San Francisco, for example. According to sf.gov, the area median income level in 2020 for a one-person household is around $89,650,” says Lawhorn. “According to our study, the required salary to live comfortably in San Francisco is more than twice that amount.”
Exacerbating the problem, many developers have focused on luxury housing and apartment developments, rather than affordable developments. This has made housing even more unattainable. “When you have an area with a high cost of living, developers are likely more often going to focus on building housing targeting high-income people, like luxury apartments,” says Lawhorn. “When this happens, those with more moderate income levels have a harder time finding housing in their price range because of the skewed supply vs. demand.”
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October 19, 2020 at 03:00PM
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California Markets Among the Most Expensive in US - GlobeSt.com
"expensive" - Google News
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