Buying A Home In California Isn't What Most People Expect

When you're dreaming about buying a home in California, it's understandable if sunny weather and ocean views aren't the only things on your wishlist. Whether you're hunting for an iconic bungalow in Pasadena, a "Painted Lady" Victorian in San Francisco, or a Spanish Revival in San Diego, the Golden State has plenty of architectural styles for homebuyers to choose from. Glorious weather, cultural diversity, and abundant job opportunities are among the pros of buying a home in the most populated state in the country. Nevertheless, newcomers are often shocked by California's prohibitively expensive housing prices, significant tax bills, high overall cost of living, and quality of life issues including traffic, crime, and environmental concerns.

One of the best questions to ask yourself before buying a home is "How much can I afford?" In California, the answer may surprise you. Housing prices are much higher in California than the national average. According to the state's Legislative Analyst's Office, mid-tier homes average $775,000 in 2026. The California Association of Realtors recently reported that the statewide median home price is just shy of a million dollars. Meanwhile, Zillow currently lists under 65,000 single family homes for sale.

In practical terms, expensive housing prices combined with extremely limited inventory means homebuyers will need to have deep pockets, high incomes, or both. Although median prices in certain areas like Northern California, Central Valley, and Sacramento are hovering around $500,000, real estate agents caution that it can be difficult to compete with all cash buyers or investors, who own a fifth of all homes in the state.

Labor markets remain volatile, so anyone looking at buying a home in California may be glad to learn that the state is currently leading the country in job creation. Despite recent tech industry layoffs, hiring rates and wages remain high in Silicon Valley. Plenty of entertainers and influencers still heed the siren call to go west, seeking fame and fortune in Los Angeles neighborhoods like Malibu, Calabasas, and Bel Air. And healthcare workers, teachers, and police officers are in high demand across the state. Relocating to the Land of Dreams could result in a pleasantly surprising pay raise, since the average median income for Californians is 24% higher than the national average according to Income By Zipcode. 

But although potential buyers may be able to find a new job with relative ease, how far their salaries go also isn't what most people expect. The nonpartisan Public Policy Institute of California found that nearly half of all homeowners spend more than 30% of their income on housing. Mortgage payments above commonly recommended benchmarks are just one of the hidden costs of buying a home in California.

The state also happens to have the highest combined income tax rate in the country, which tops out at 14.6%. California's property taxes add another expense that often surprises homebuyers. Every property is taxed at 1% of its assessed value by the state, and local levies generally increase buyer's bills to between 1.1 and 1.35%. Although they're nowhere close to the highest property tax rates in the country, even a small percentage assessed on an extremely expensive home can really eat into a buyer's budget. 

Figuring out how to afford a home in California is one thing. Navigating the high overall cost of living is quite another. Outpaced only by Hawaii and Washington, D.C., the Golden State has the highest utility costs in the country, the third highest grocery and healthcare costs (behind Hawaii and Alaska), and, after Hawaii, the second highest transportation costs. And paying way more to cover typical monthly expenses isn't the only surprise that awaits many new homeowners.

California's varied geography also includes unique challenges that many buyers don't anticipate. Depending on where you purchase, steep hillsides, heavy rains, and active seismic areas can cause costly maintenance issues. Shifting soils, erosion, and extreme weather can contribute to foundation settling problems that require expensive repairs. Worse yet, wildfire-prone areas across the state are experiencing a home insurance crisis. According to the Stanford Report, California homeowner's insurance premiums have increased 84% since 2020. That's assuming you can actually buy coverage from the largest insurers in the first place, since many have reduced or completely eliminated underwriting new policies.

Along with these environmental concerns, some homebuyers may also be surprised by other quality of life issues including traffic and crime concerns. While you can avoid a bumper-to-bumper drive home in some smaller regions, urban areas like Los Angeles are among the most congested metro areas in the world. Along with experiencing road rage incidents, new homeowners may find themselves joining the majority of Californians who are concerned about property crime on a frequent basis. According to Safewise, 67% are also highly concerned about violent crime happening to them. While plenty of people enjoy life in the California sunshine, it's important to carefully do your research before you buy.