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It’s no surprise to anyone that living in Los Angeles is expensive. But, would you be surprised to learn that L.A. is currently tied with Hong Kong for the dubious honor of the fourth highest cost of living in the world?
The cost of living in L.A. is 54% higher than the national average. Housing, utilities, food, and entertainment all cost more here. Taxes are among the highest in the nation, as are gasoline prices. Of course, salaries are a bit higher as well (13% more than the national average), and the weather is tough to beat. But, is that enough to make the higher cost of just about everything worthwhile? Here’s a look at how housing, utilities, and other essential living expenses in Los Angeles stack up against the rest of the country.
Los Angeles Home and Rent Costs
The median sales price for a house in Los Angeles in December of 2022 was $915,000, or $580/square foot. That’s compared with a nationwide median of $388,310. According to Zillow, median rent in Los Angeles during the same month was $3,021–up nearly 10% from the previous December. While a few metros like New York and San Diego came in higher, the L.A. median significantly higher than in other metros around the country, such as Chicago ($1,850), Phoenix ($1,995), Dallas ($2,000), Orlando ($2,100) and Atlanta ($2,182). In smaller metros around the country, the difference is even more extreme. For example, median rent in Cincinnati, Ohio was $1,350 during the same period, and just $1,070 in Des Moines, Iowa.
It’s important to note that these costs are the median for all properties. Purchase and rental prices will obviously vary based on size, number of bedrooms, location, condition of property and other factors.
How much will utilities, electric and phone in L.A. cost?
Utilities are one area where Californians have a bit of an advantage. In 2022, California was ranked 35th in the nation for average monthly utility bills. More specifically, the average electric bill in California was $138.16, compared with $142.56 nationwide. However, natural gas prices in California are a bit higher than the average, with the state ranking 16th in the nation. According to ApartmentList, the average total essential utility bill–that includes electricity, gas, fuel, and water–in Los Angeles is $245.67/month. Utilities are a relatively small expense compared with rent or a mortgage payment, but it’s important to factor them in when determining whether a place is within your budget.
Getting Around L.A.: Gas and Insurance
As of January 11, 2023, the average price for regular unleaded gasoline in Los Angeles is $4.50/gallon, and the average for premium unleaded is $4.832/gallon. That’s down significantly from the peak $6.494/gallon average in October of 2022. But, it’s still considerably higher than most areas of the country. The average gas price nationwide is $3.267/gallon.
Of course, the price of a gallon of gasoline doesn’t tell the whole story. Californians on average drive just 12,524 miles per year–1,739 fewer than the average American. And, gas consumption is much higher in some parts of the country. In Wyoming, the average number of miles driven per year is 24,069. The average Los Angeles commute is also shorter than the national average, meaning residents make up some of that extra cost-per-gallon with lower usage.
Another significant cost associated with owning and operating a vehicle is car insurance. California isn’t the most expensive state in the nation for automobile insurance coverage: that honor goes to Florida.However, the average annual cost for full coverage in California is $2,115–more than 25% higher than the national average.
Parking can also be brutal, especially in downtown L.A. The city was recently listed among the five most expensive metros for off-street parking, with a median of $20/hour or $235/month.
Budgeting for Food and Entertainment
Los Angeles didn’t make the most recent list of five most expensive places to buy groceries in the United States, but two other California cities did. And, L.A. prices are still higher than those in many other areas. On average, a Los Angeles resident can expect to pay about 13% more for groceries than the average American. That means if the average U.S. household spends $5,259/year on groceries, the average L.A. household spends $5,942.
The average American household spends about $297/month on entertainment. In L.A., you can expect that cost to run about 15% higher, or just over $341.
Los Angeles Income and Sales Taxes
California has one of the highest sales tax rates in the nation, and many cities and counties tack on an additional sales tax. In Los Angeles, the total is a whopping 9.5%, and the rate is even higher in some areas of the state.
Income tax is graduated in California, meaning that you pay different rates as earnings increase. For example, an individual earning $20,000 can expect to pay $299.01 in state income taxes–about 1.5% of their income. An individual earning $60,000 will pay $2,415.31, or just over 4% of their income. And, an individual earning $999,999 will owe $105,530.57, or 10.5% of their income. How income tax impacts the cost of living in Los Angeles depends largely on your earning bracket.
How to Budget Your Lifestyle in Los Angeles
If you need help with budgeting and getting your finances back on track, we might be able to help. Thousands of clients have come to us looking for an answer to get out of debt. While bankruptcy might not be right for you, don’t discount it completely! Every situation is different. We also help clients with debt negotiation and student loan repayment.
Our experienced Los Angeles bankruptcy attorneys are standing by to help you make a good decision about your financial future. Believe it or not, life after bankruptcy does exist. Contact us today for a free consultation.
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