California: You Can’t Afford It has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. Thank you for your support.

It’s my third day of being sick, so I will simply wish you a great weekend and share an amusing t-shirt I found in Target.

It would be more funny, except it’s kind of true for half of Californians:

More than half of the state’s homeowners with a mortgage—51.4 percent—spend more than 30 percent of their monthly income on housing costs, according to 2005-2009 estimates from the U.S. Census Bureau’s American Community Survey. Renters in California are in the same boat, with 51.8 percent spending more than 30 percent of their income on rent and utilities.

The 30 percent threshold for housing costs has long been a conventional marker of affordability.

Time to suck down more Ricolas… has partnered with CardRatings for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

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  1. Here is in the Bay Area, we call it the weather tax.

  2. I’ve always thought that 30% rule is a little silly. Maybe if you’re making enough money you can afford to put 30% of your income into a house, but we certainly cannot. Our mortgage payment is only 20% of our income, and we are pretty frugal people, but that other 80% dissapears pretty quickly and we still aren’t putting as much into retirement as we would like.

    Basically, don’t assume you can afford a house because it fits the 30% rule. Look at your actual expenses and see what would really work for you.

  3. HS @ Our Debt Blog says:

    Sad but true… do you think Liberal policies are to blame?

  4. Every time I’m out there I wonder why we don’t just move to the Bay area. Then I remember why, and this is the reason.

  5. Hey, I’m in the Bay Area too. Fart East Bay where it’s more affordable. It is true for many in the more expensive areas. I think it all goes back to both the buyers and the lenders. They left out common sense when they were signing papers. Ya can’t make $30k/year gross and afford a half million dollar home.

  6. It’s no better in southern California either. Where I’m at in San Diego the average household income is around $45K, and the median home price is $330K. I think that housing prices of 7x the annual household income is a little crazy, and probably unsustainable.

  7. don’t forget the 10.25% sales tax and the 8.25% state income tax

  8. what a joke…i continue to pity these people

  9. But yet so many of us still love it in California 🙂

  10. Yet another reason why I’m glad I don’t live there.

  11. As I said in the other comment, it’s completely not affordable here in San Diego – but after having lived just about everywhere else (East coast, Midwest, South) I’m never going to leave! I’m fortunate enough to have a good stable job, and to not have gotten myself into trouble with my home purchase – but unfortunately most people are not in that comfy a situation. I know the rest of the country doesn’t feel sorry for us, but you really should. There are millions of hard working people here who are completely innocent of the bad behavior that caused the situation they are in. When things go kaput in the housing market here, it will truly be sad the number of honest families who will be in poverty and/or homeless. Unfortunately, just like on Wall Street, the people who got us into this mess (property speculators, home flippers, etc.) will profit while the working people of California suffer. And because our problem is magnified compared to most other areas of the country, so will the suffering.

  12. I think Steve’s comment about the weather tax hit the nail on the head.

    It is currently 78 degrees, 25% humidity in Los Angeles right now.

  13. I absolutely LOVE California. Born and raised here. Yes, I’ve visited other states, actually moved to another state temporarily, as well. But I love the diversity here, and my family is here. I don’t think I’m stupid to want to live in a state that makes me happy. We all live where we want to live.

    No state is perfect. Each state has their own problems. California is not the only expensive state to live in. Plus, many focus just on the expensive areas of California. It’s a pretty big state and other regions are more affordable than others.

  14. What’s more, California’s going to be one of the most expensive states to drive an electric vehicle in, according to this L.A. Times article from today (1/14/10).

    “California may have the highest costs for charging electric vehicles, study says”,0,5756943.story

  15. After 50 years of living in California, I couldn’t take it any longer. Now I live on a big “bed and breakfast” house overlooking a lake in Indiana. I’m loving it. Funny thing, I pay only about half on my new mortgage than I was spending on rent in California. I was so tired of playing “Emperor’s new clothes” and paying a ton for what shouldn’t cost so much. An old song was true when it sang, “All the Gold in California is in the bank in the middle of Beverly Hills, in somebody else’s name. . . . So if your dreaming about California, it don’t matter at all where you’ve played before, California’s a brand new game.”

  16. my mortgage is 15% of my gross. That includes prop taxes. I can’t complain.

    of course, if I was living somewhere else I’d probably have a comparable property for much less….but what would I do with my time? I love it in CA and have no plans to leave.

  17. used to live in sf and now living in bay state (MA). we have been bombarded with 22 inch of snow, but the quality of health care, public education system you have is here far superior than living expensive cali. may be we will retire in cali some day

  18. Steve Sildon says:

    @Tim – you’ve got charge that Prius at night when power rates are much less expensive. Shorts and flip flops in January makes that ball and chain mortgage feel a little lighter.

  19. I lived in Southern California for 8 years. I lived in a Bachelor apartment(think studio with no kitchen) that had rat traps in the hallways(true story). In the garage there were 3 new BMW’s, 2 Land Rovers, and 3 Hummers!!

    Gotta Love SoCal and gotta love Seattle suburbs so much better!!

  20. San Diego too. We’re a tad abnormal, I guess, as our house is about 19% of our income. If we moved back to our other house in the college area (and booted the renter) we’d be looking at about 8% going to housing. I keep trying to convince my wife to do that but no go so far. We could be totally debt free in a year or two with that plan.

    I must say if you pay off a house in California it’s really tough to ever leave that house or the state. My parents pay less than $400 a month total for taxes and insurance on their paid off 2200 sq ft house in no Cal. They couldn’t possibly move somewhere cheaper or better. My mom’s fond of telling us she’ll die in her house and she’s probably right… most other states the taxes become unmanageable but with prop 13 she’s gets a very small bump of ~2% on her tax bill every year.

    I can only see leaving the state for a really great job opportunity or to move abroad.

  21. I lived in LA for about 10 years, and know Cali inside out. I left that overpriced cesspool about 15 years ago, and you can’t believe how much money I’ve been saving since then. My other relatives who still live there are throwing the towel, too. I live much better now, beachfront, 15-minute walk to work. Haven’t driven for ages. How’s that car cost there? Can you live beachfront in Cali? I always hear these romantic tales about California, but, in reality, once you add the cost, the crime, the amount of time you spend commuting, the gestapo rules, fees galore, the Tijuana feel, etc, you notice there’s no value. Lots of people are still in love with what Cali used to be, not what it’s today. Denial. And it only gets cheaper and better, right? California is good for rich folks, like the Hollywood elite who just drive within the Westside area and take 3 months off in St Tropez. Hey, but the weather is nice, if you can find time off commuting -> work -> home -> mall

  22. Live in Northern California once / but leave before it makes you [broke].

  23. I love Northern California, and have lived her my entire life. Housing costs grew wildly out of control in the 90s up until about a few years ago when the whole thing collapsed. It became impossible for a single person to purchase a house without making a substantial income. For the longest time, houses were 600K to a million in my area, and I kept thinking to myself it’s ridiculous. I have friends in other states where they were able to spend 200k, and practically own a mansion on a huge piece of land. Where here, if you have a yard, you’re either lucky, or you bought an older house.

    While housing had finally adjusted itself and rightfully so, it’s still a little higher than it should be.

    But I think the major concern for the area, is gas prices. They’re way way too high. What is it right now… 3.40-something? and I’m like 10-20 minutes away from the refineries! I’m convinced– it was gas prices that hurt the ecomony a few years ago that caused prices for everything to go up. It’s the one area that I felt hasn’t corrected.

  24. I live in the SF bay area and spend around 14% on housing. I share a room though…

  25. No one that lives or has lived in California refers to it as “Cali”.

  26. Steve Sildon says:

    @Tom – tru dat!

    That’s so true … that’s like people who live int he Bay area referring to it as “Frisco”. Fail!

  27. Tom – I think LL Cool J would disagree with you. 🙂

  28. so Jonathan do you live in CA ?

  29. Anonymous says:

    Left that place and moved to Texas. My wife and I make $67K/year here and bought a new construction 1,600 square foot house for $155K. We also have two 2009 vehicles. No way we would ever be able to afford this lifestyle in California.

  30. The concept of So Cal being over-run with immigrants or riddled with crime is a by product of the media (mostly Faux News). It’s a fabrication. Unless you live in a certain parts of San Diego – say Mid-City or National/San Ysidro or El Cajon, then it’s just not a fact of life for San Diegans. The coast, with the exception of peter pan-villes like OB/PB is just wealthy and mostly made up of people with great jobs or great inheritances. The middle areas are and north county suburbs are all working class to white collar.

    My parents are sitting on a house worth north of 600k (yes, even with the recession) and they’re paying nothing to keep it. That’s something that could only happen in CA. Other states would appraise the house at 600k+ and hit them with a 12-18k tax bill every year . Instead they see less than 3.5k a year in taxes on that house. There’s no way they could replicate that, my mom’s current comfortable salary in another state (dad’s retired).

    I’ve got homes in Dallas that get hit with more property tax than my rental home in San Diego yet the SD one would sell for 3 times more. Most of my mortgages in Texas are comprised of taxes and insurance!

    If you own a house in CA and can keep it for 20-30 years, you’ll make out. Own it for 30+ with a paid off mortgage and you’ve got a goldmine.

  31. New homes are selling in Manteca, CA in the $160k price. Just depends on location.

  32. We had an unflattering nickname for Manteca when I lived in NorCal. Like Stockton it gets, maybe unjustly, its fair share of jokes. It could be worse, it could be Lincoln or Temecula – then it’s hot AND overpriced.

    Someone mentioned crime in CA. Not sure what he’s talking about. Living in San Diego the only time I see anything approaching the likes of TJ I’m in San Ysidro. The media likes to paint a picture of crime and “foreigners” running amok in CA but having lived here my whole life and SD for 18 years, I don’t see this ever. You really have to seek out bad areas of towns to find crime.

  33. Weather tax indeed. It was 78 again for most of today without a cloud in the sky. Gotta love this January weather. I know a lot of people who moved out here from all over the country and pretty much all of them don’t ever want to move away.

    Renting at just under 15% of gross in Southern CA.

  34. Crime? Funny, because my mid-west small town family roots have far more tales of crime than any we have experienced in California. I suppose more petty crime, but easy to avoid with common sense.

    Actually, there are plenty of desirable areas to live in California that aren’t that expensive. I live in Sacramento. I don’t miss the Bay Area in the least (where I grew up – I don’t miss the crowds and the price tags). I still have all of the perks of California and still plenty great weather. Without the price tag. Life is good.

  35. The difference in Tx & Northern CA. The weather in TX, it’s hot, humid a lot of the time, or its freezing cold, or too much rain, or to many twisters looking to destory something, Heal the size of golf balls and larger, there is no state tax in TX. but if you add up all the small taxes, toll roads, they even Tax when you have a service done. Everytime you turn around there is another tax, add all those small expenses, and you will find out it comes close to what is in CA. they just don’t hide their taxes. In No. CA. you also have beautiful Mountains, natural lakes, beautiful ocean, beaches, there is always something to do there, bike lanes, fishing is great and you don’t have sweat your ___ off, you can camp almost the whole year through without an air conditioner. I moved here to be with a special someone from Tx, and that person wishes we could go back now.
    Calif. is the real Gods country, his creations is there, and for Texas, for the past years living here, I feel like I now live in hell. Over here there is so many people that are looking for some kind of fight, and a lot of the time we all have to fight because someone is always trying to cheat someone.
    Why don’t I move back, it’s too late my home in CA. was sold, and lost my security here, lost a business, people I should’ve been able to trust, stabbed me in the back. I am a senior now. Oh well right.

  36. I live in the South Bay area (Silicon Valley) and while me and my wife are “Obamarich” I DEEPLY regret making the decision to move here. 250k doesn’t go very far here unless you are absolutely debt free.

  37. Lived in Moraga Ca. Nice. live in Austin, Tx. Nicer.

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