News Summary

A new study reveals that California households are dedicating 44% of their income to housing expenses, making it one of the highest in the nation. With rising home prices and low ownership rates, many residents struggle to find affordable living options. The median home price in California reaches around $909,400, exacerbating the issue for first-time buyers. Understanding these housing trends is essential for those considering a move to this beautiful, yet costly state.

California Households Feel the Housing Pinch

California is a beautiful place to live, but it comes at a serious cost! A new study reveals that households in this golden state are spending an eye-popping 44% of their income on housing. This staggering number places California right near the top of the rankings for housing expenses in the United States, only trailing behind Hawaii, where residents allocate a whopping 53% of their income to keep a roof over their heads.

The Big Picture: Who Else is Affected?

Following closely behind California is New York, where households spend about 42% of their income on housing. Massachusetts and Oregon aren’t far off either, with 40% and 37% respectively. Florida, while a popular destination, also has a sizable portion of its households’ income, at 34%, going toward housing costs. For a national perspective, the average household spends only 26% of their income on housing, making California’s costs seem even more daunting.

Owner vs. Renter: The Cost Divide

When we zoom in on the housing market, homeowners in California find themselves facing the second-highest costs in the nation, contributing 46% of their income to housing. Just like before, Hawaii takes the top spot, demanding 53% of its homeowners’ earnings. Oregon isn’t far behind at 36%, while Nevada and Washington both require about 35%. Even more surprising? The average homeowner nationwide spends around 26% of their income on housing, with some states, like Iowa, only spending 19%.

For renters, California is also feeling the heat, ranking sixth in the nation as they fork over 42% of their income to keep a rental roof overhead. In the rental market, New York leads yet again, with a jaw-dropping 55% of income going toward rent, and then there’s Hawaii, Massachusetts, and Florida following behind.

Homeownership: A Tough Nut to Crack

In terms of homeownership rates, California ranks as a challenging state, with only 55% of residents owning their homes, which puts it right behind New York at 53%. This low ownership rate is partly due to the eye-watering home prices. As of 2025, California’s median home price is around $909,400. If you’re planning to make a traditional 20% down payment, that’s over $180,000—a hefty sum that many first-time buyers find difficult to come up with.

With the average salary hovering around $89,945, many first-time buyers in hot markets like Los Angeles and San Francisco struggle to meet the down payment requirements. While California does offer some assistance programs for these buyers, they come with strict eligibility requirements, making the competition fierce.

Additional Costs to Keep in Mind

Acquiring a new home doesn’t just stop at the down payment; there are a plethora of additional costs to consider. Closing costs can add up to 11% of the home’s price, and that’s just the start. Movers, property taxes, homeowner’s insurance, and homeowners’ association (HOA) fees can quickly turn your budget upside down. Additionally, prospective buyers may need to put down earnest money, typically between 1% to 3% of the purchase price to keep their offers competitive—a risk if the sale goes awry.

So, What’s the Takeaway?

Life in California is undeniably delightful, but navigating the housing market here is becoming increasingly tricky for many households. With high housing expenses consuming such a large chunk of income, it’s worth keeping an eye on these trends if you’re considering moving here—or simply dreaming of one day owning that beach cottage!

Ultimately, understanding the landscape can help residents better prepare for the exciting journey of finding a new home, even in a place where the price tag often matches the stunning views.

California Households Face High Housing Costs