Affording California

Recently, I have been doing alot of research on California and its future. California is experiencing population decline due to a variety of reasons but it boils down to a high cost of living. Taxes, high gas prices, and of course higher than average rents and home values. My question is how will anyone unless you make $800k or more a year be able to afford a decent sized (2,200 SF), renovated home in a good area/school district? May I add you want to raise a family and have kids. Even if you are early in your finance and tech career, home values will continue to increase above wage growth given the limited number of single family homes. Seriously, who will be able to buy homes in California? 


There’s a lot of things wrong with your argument here and without really diving into it given I don’t want to, you’re referring to very specific markets (Los Angeles, Orange County, San Diego, SF/Bay Area/SAC) where infill development is no longer possible. 

There is much, much more to CA than four or five markets. Homes sell for $400-$600 literally across the mountains of LA County and Orange County. It’s a one hour drive to a Tier 1 city and a one hour drive to the beach. Very affordable. 

I hear you that pricing is pushing people out / keeping people from growing their family but it’s possible. I’d just rather not have people who appear to not live in CA overstate and dramatize the reality. 

“Bestow pardon for many things; seek pardon for none.”

If you work in west LA and want to be an hour drive including traffic, which markets are you talking about? 

I also live in LA and love the weather and variety of things to do. I also see homeless people loitering outside apartments built in 1975 that cost $2,700 for a 550 sf 1 bed.


West LA / LA is a driving nightmare for about 2-3 hours in the morning and the evening, but you and I both know folks from the IE and OC commute daily, and commute less in 2023/24 with the uptick of remote work. 

What does homeless have to do with anything? That is present in every city across the country. 

“Bestow pardon for many things; seek pardon for none.”

For the homes at the more affordable price point, which areas are you referring to? 

And are they more affordable because builders are able to do in-fill development in those areas instead? 


A lot of this is available in the IE, Riverside County and San Bernardino County. I know developers building further NE (Apple Valley, Norco, Victorville) where land is pretty abundant and they can sell their tract homes for $4-600k. Just an online search shows there is a lot of inventory in that range in both those counties for homes >1,500 SF.

“Bestow pardon for many things; seek pardon for none.”

Nobody moves to Los Angeles to live in Apple Valley, Riverside, Victorville, etc. They want to be in West LA and the bottom line is that real estate prices there are out of control. You basically need to be dual income no kids with a household income of at least $700K. 

What would be considered a starter home in every other market in the country costs $2M. Houses in South Central and places like Compton start at $900K-$1M that need a lot of work. 

You basically need to become a C Suite executive, partner at HF/PE/AM/VC, or MD at a bank to afford a 1,700 square feet 3 bed 2 bath place in West LA. That’s not a luxurious lifestyle and isn’t achievable for 99.9% of the population.

Personally find it ridiculous how you can be in the top 1% of earners nationwide but can’t afford a middle class lifestyle in West LA.

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In the Bay Area/SF, this is really only the case for a handful of areas. Up north, Marin area is known to be fairly expensive and has maintained that reputation for quite some time now. Palo Alto, Mountain View, Menlo Park, and Los Altos are all further south in the Bay and are where all the tech people have moved down to in order to be closer to their offices in the Mountain View area (Google campus, Apple, FB are all located near there). There's a fair amount of housing in the East Bay (Danville, Walnut Creek, Concord, Fremont) and between SF and the South Bay (Burlingame, San Mateo) and Santa Clara even further south which are all fairly respectable and much more affordable than these other areas where a one-story 3-bed house goes for $3m+ (no joke). 


Been wondering the same - in the coastal towns where 3bd 2ba homes are already likely a couple mil currently, wouldn’t people need to be making a lot more over time in order to afford even start houses in those places? Not everyone wants to necessarily be in a mountain or desert location 


What types of people are buying homes currently in areas like Pacific Palisades or Laguna Beach, where homes can be north of 1.5k/sq ft?? How much money are these folk making / what do they do for work? 


Any insight on what to expect as a good price for rent? Working in LA this summer around beverly hills/culver city. Looking for affordable place and open to roommates, but want to try and get best price possible. I’m not from the area but checking online I’ve seen wide variety of prices quoted



The coastal towns around LA and SD are super nice areas, but what are people in those towns doing for work? Are they mostly business owners? 

My sister has a house in Encinitas, CA. Both her and her husband were airline pilots when they bought it. My other sister lives near the beach in San Clemente - her husband is in IT out of LA, but is mostly WFH now and my sister is a designer.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

The coastal towns around LA and SD are super nice areas, but what are people in those towns doing for work? Are they mostly business owners? 

The same high income jobs people who own expensive places do across the country do

Commercial Real Estate Developer

Tons of people bought when prices were cheaper in the 90’s and given the crazy values the average person inherits their parents or grandparents house. These people also get to take advantage of prop 13 and pay virtually no property taxes.

I have several buddies who make less than $70K who own $2M houses through inheritance that were bought for $300K in the 90’s. One of them paid IIRC less than $4K in property taxes last year because of this loophole. 

You basically need to make 7 figures if you want to afford a decent house in LA now unless you’re inheriting. I make really good money and it’s depressing that I’ll likely struggle to afford in a best case scenario a comparable house to my buddies who make a fraction of what I do.

I’m in my late twenties and am starting to settle down but am coming to realize I may not be able to afford a house in a decent area until I’m in my late 40’s. I see family members 10 years older than me with 1 kid and a household income of $600K currently struggling to buy a place in West LA. It’s certainly discouraging but it won’t get better and prices will only continue to go up barring some natural disaster. 

To put things into perspective how ridiculous the market is here one of my friends parents were grocery store cashiers and never went to college or made more than 80K/year but managed to a buy in the 90’s in what is now an upper middle class area. Your average MD or Consulting partner couldn’t afford to buy their house today as it’s appreciated to nearly $3M. I’m happy for them but again it’s disheartening when a top 1% outcome can’t even achieve the standard of living of two lower middle class hourly employees.


I'm also a newbie in this, but diving into California's housing scene is eye-opening. The cost of living is sky-high, and it's a puzzle figuring out how regular folks can afford spacious homes. The dream of a family-friendly abode in a good area feels like a distant goal.


The answer is people won’t be able to afford homes and the greatest predictor of whether you own a home will be via inheritance.The standard of living for the bottom 25% will likely continue to rise exponentially at the expense of the middle and upper middle class while the people at the top get exponentially wealthier.

Unlike everywhere else in the country the school district you live in is irrelevant for people. Everyone who can afford to send their kids to private school does because LAUSD is so bad even in the good neighborhoods. In places like SF it’s also irrelevant because they have a lottery system for the entire city so you could live in a nice neighborhood but your kids might have to go to school in the hood. 

I’m really interested in seeing how the wealth inequality issue gets addressed here in the next 20 years. The riots during the pandemic showed that when people don’t have any ownership of anything they have nothing to lose and as a result things can get ugly fast. When 95% or more of your city can’t afford a house I wonder if we’ll see similar or more dramatic riots as these people really will have nothing to lose. 

Personally I think the issue will only get worse which I believe also increases the likelihood of a violent outburst. I could very well see someone like Bezos, Zuckerberg, Elon, etc. properties getting mobbed like Versailles and burned to the ground if we’re heading down a bad path here.


Sounds like it’s partly because of nice neighborhoods, sunny all year, close by to the beach, and not a lot of new construction. 

Norcal is where many tech firms and startups are, so you got plenty of high income folk there 


Are prices high there because they’re mostly costal towns near the beach?

That is where the prices are highest, yes. 

There are plenty of affordable homes in California, but they aren't right on the coast 

Commercial Real Estate Developer

San Francisco houses are looking pretty affordable at the moment compared to West LA.  Note that a lot of the row houses have an extra bedroom in the first floor that don’t show up on MLS because they are not permitted.  So you need to factor that into price per SF. 

The City will rise again.

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LA prices aren’t out of control. People continue to pay to live in CA because it’s worth it.

If you’re a high earning, career-minded person that wants great weather, where else could you live other than SoCal or SF? There are no other options. Of course starter homes are going to cost $2mm.

If you want cheaper houses, try Texas. 30-40 degrees in the winter and 110 degrees in the summer. Enjoy your 2,200 sf house next to a good school.


All 3 of the towns you mentioned may be nice but they are so far from either the coast or the city. What types of people live there and how are they able to afford homes that are still so expensive when they’re nowhere near any job centers?


OP, I think you know the answer to your own question.  Short of family support or a liquidity event, you will be locked out of the choice areas in LA County.  No Brentwood or Westwood for you, my friend.  Keep plugging away at your career and W-2, it won't be as bad as Simi Valley but one day you may be able to afford the non-good parts of Encino next to a low-performing dentist who wears multiple gold chains.  

Pro tip: when you are talking about $2 million (at a minimum, it is really $3.5+ for a single-family house in a good part of West LA) home purchases you don't ask about school districts.  


Why don’t people ask about school districts there?

Most people at this price point in LA (and especially San Francisco) send their children to private. School assignments in West Coast cities can also be whacky with no guarantee you are going to the school two blocks from your house, you may be bussed up to an hour each way, for reasons.