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 days and ocean views aren't the only things on your wishlist. Glorious weather, cultural diversity, and abundant job opportunities are among the pros of buying a home in the most populated state in the country. But there are a few issues you might not expect, mostly related to its climate. While you'll see bright California skies most of the time, there are dangerous weather conditions that may impact your home, such as mudslides, earthquakes, and wildfires. These factors might go beyond what the average out-of-state homebuyer would expect, affecting everything from the features you'll find in California homes to the home-buying process and the associated costs.

One of the other key questions to ask yourself before buying a home here is "How much can I afford?" You may already expect that housing prices are much higher in California than the national average. But it doesn't stop there, as inventory is also more limited than you might think: Zillow currently lists under 65,000 single-family homes for sale there. And potential high costs go beyond the mortgage. The high property taxes and insurance may also surprise some house hunters.

However, there are homes out there that can help offset some of these concerns. Whether you're hoping 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 popular house styles for homebuyers to choose from. Plus, because the state is so large, your experience may vary depending on where exactly you move in California.

If you buy a home in southern California, steep hillsides and heavy rains can cause costly maintenance issues. These conditions mean that some may be surprised by certain features that aren't widely available. For example, despite the state's diverse architecture, California homes often don't have basements. Slab foundations are more traditional in the state because they are easier to produce, which was a key consideration for builders during California's post-WWII housing boom. Plus, since the state generally doesn't sport much of a frost line, there's little need to dig deep to protect against frost heave; you can have a perfectly safe home while saving substantially on the cost of adding the extra below-grade level.

Warm weather is generally a positive in California, but the unique climate means insurance options may also be more limited than you might expect elsewhere. A history of wildfires and other severe events have caused many insurers to hike premiums substantially or drop available coverage entirely in certain areas. According to the Stanford Report, California homeowners' insurance premiums have increased 84% since 2020, and many owners have dropped their coverage as a result. 

For buyers, though, a mortgage demands insurance, so depending on where you purchase your house, you may be limited to the FAIR Plan, a last resort policy made available when no other insurer will provide fire insurance. This can complicate the buying experience, as the limited coverage means you will likely pay more for insurance and have to cobble together multiple plans or get a Differences in Conditions policy to fill the gaps and satisfy your lender's comprehensive policy requirements. Home fire-mitigation features or locations in Firewise communities can help with the cost of premiums, but if you're in a fire-affected area, you could encounter a more convoluted escrow process.

It's well known that sales prices and property values are high in California, but one pleasant perk is its property tax structure for long-term homeowners. Per the Tax Foundation, California's property tax rate in 2024 ranked as only the 32nd-highest tax rate among all 50 states. Part of this stems from various initiatives to manage tax costs even as property values swell. Prop 13, passed in 1978, limits property taxes to 1% of the home's taxable value based on when you buy it, though other local levies will add to it. On top of that, the assessed value can only rise a maximum of 2% annually, regardless of how the market shifts.

It may seem like an unpleasant (and unfair) surprise when you initially buy your house and find your next-door neighbor, who has lived there for 25 years, pays hundreds of dollars less in property taxes despite owning a near-identical home. But over time, that limited adjustment could similarly save you thousands in extra costs. And if you want to downsize after the age of 55, another initiative, 2020's Prop 19, can save you significantly on the property taxes of the new home when you move.