(The Center Square) – According to new reports from the California government, while wages and the costs of services and wages are rising, the costs of goods are finally going down. The state-funded, non-partisan Legislative Analyst’s Office said in its housing report that it’s nearly twice as expensive to buy a two-bedroom home as it is to rent, a gap not seen “since the housing bubble in the mid-2000s.”
“Inflation on consumer goods has returned to pre-pandemic declines,” noted the LAO in its inflation report.
In September, costs of goods declined 3.4% year-over-year while inflation in wages was 4.1%, and inflation in the cost of services was 4.4%, suggesting overall, Californians may finally be getting more for their money.
Californians had lower inflation for housing, transportation, gasoline, and even food than the national average, while inflation on clothing was 60% higher than the national average, education 61% higher, and utilities 42% higher than the national average.
The cost of utilities increased faster than any other measure examined in the Legislative Analyst’s Office report, finding utilities rose 41.5% in California since January 2020 compared to 29.2% for the nation as a whole.
Green energy requirements, multibillion dollar wildfire settlements, transmission upgrades to move intermittent green energy, and growing power grid capacity to be able to handle powering electric vehicles are extremely costly endeavors, leading California energy to cost more than twice the national average.
On the housing front, the LAO found a bottom-tier California home now costs $476,000, requiring a monthly mortgage of $3,404, and a minimum $136,000 annual household income to afford; the median household income in 2023 was $96,000. For a mid-tier home, those numbers were $773,000 in total cost, $5,530 in monthly mortgage payments, and $221,000 in minimum annual household income, suggesting the typical home is well out of reach of the median family.
The LAO’s report also notes that housing prices have increased faster for bottom-tier homes than it has for mid-tier homes, finding from January 2020 to September 2024, monthly payments for mid-tier homes grew 75%, bottom-tier homes 80%, rent 34%, and wages 22%.
The costs between renting and buying varied by county, with wealthier, coastal areas exhibiting the highest difference. In San Mateo County, renting costs 41% of buying a similar home; renting a bottom-tier home costs $8,027, while renting a similar home costs $3,348. In San Francisco and Orange County, renting costs half of buying, while in Sacramento renting is 69%.
