Yahoo Finance It Costs You Over $70K a Year To Live in Los Angeles: Here’s Why
A new GOBankingRates survey found that living in Los Angeles costs an average of $70,320 per year. Of the 50 largest U.S. cities, that’s behind just San Francisco, San Jose and Oakland. The high cost of living can be attributed to soaring housing prices, transportation expenses and daily living costs.
Despite these challenges, many residents find ways to manage their finances and maintain their lifestyles.
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Why Los Angeles Is So Expensive
With a thriving job market, cultural diversity and year-round sunshine, L.A. is widely considered a desirable place to live. That’s one reason it’s so expensive. Here are a few others.
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High Housing Costs
L.A.’s housing cost-of-living score is three times the national average, according to BestPlaces. The median home in the area costs $912,500, and the average rent for a two-bedroom apartment is $2,370 per month. That’s almost $1,000 higher than the national average.
These high rent prices force residents into tough decisions. Studies have found that L.A. tenants are spending too much of their income on rent. Many of them likely have no other option but to move out of the city.
Given L.A.’s high home prices, buying a house is an option many residents can’t seriously consider. This creates a situation in which people often have no choice but to pay exceptionally high rent prices if they want to stay in Los Angeles.
Expensive Transportation
L.A. residents also spend 25% more on transportation compared to the national average, according to RentCafe. RentCafe’s calculations encompass a variety of costs, but fuel is the most important.
Gas prices in Los Angeles tend to be 30% to 40% higher than the national average. L.A. is also notorious for its bad traffic and long commute times, so it’s no wonder that city residents spend more on getting around.
California Prices
L.A. residents don’t just live in an expensive urban area. They live in an expensive urban area in a state where prices are already higher than average.
California’s living costs are around 30% higher than the U.S. as a whole. The state’s residents spend more on groceries every week than they do anywhere else in the U.S. Utility costs are also high, as California has the priciest water bills in the country.
Taxes
Finally, California also has some of the highest state income tax rates in the U.S. For example, it charges anyone earning more than $1 million 13.3%. The average single filer pays around 8%. California also has the ninth-highest combined sales tax rate at 8.66%. These are extra costs that residents of cities like L.A. have no choice but to pay.
How People Afford To Live Here
Given all of these costs, you might wonder how anyone can afford to live in Los Angeles. The region is home to plenty of A-listers, sports stars and business icons. But how does the average person survive?
According to ZipRecruiter, the average L.A. resident earns more than $68,000 per year. That means a large percentage of the population makes enough to cover the $70,320 in annual living expenses. That’s also higher than the U.S. annual average salary of $59,384.
That being said, there are plenty of people in the area who have to get by with less.
The minimum wage in California is $16 per hour — $20 for fast food workers. Someone working full time earning $20 an hour will take home only about $1,510 monthly in California if they get paid bi-weekly. That’s not even enough to cover the average L.A. rent.
These people have to make sacrifices and get creative to afford living in the area. That often means getting roommates and commuting longer to pay less in rent.
The Financial Bright Side of Los Angeles
There’s no getting around the fact that life in L.A. is expensive, but there are a few areas where residents can save compared to people living in other states or cities.
For example, healthcare costs are about 10% lower in Los Angeles than in the country as a whole. That could be for several reasons: the city is full of great hospitals, year-round sunshine makes it easier to stay active or maybe L.A. just attracts a healthier crowd.
L.A. also has lower utility prices than California as a whole and a slightly lower average grocery bill than the rest of the state. That may not be much to get excited about, but that’s the price of living in Los Angeles.
Information is accurate as of June 21, 2024.
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This article originally appeared on GOBankingRates.com: It Costs You Over $70K a Year To Live in Los Angeles: Here’s Why
