Huge housing costs are stressing out California

Roughly 1-in-5 California households have housing expenses gobbling up more than half of their incomes.

My trusty spreadsheet identified numerous affordability challenges by analyzing 2024 Census Bureau housing data for the 50 states and the District of Columbia. These latest figures detail swings in who’s renting and who owns, how much they pay a month, which households are financially swamped by housing expenses, and how many folks can squeeze into a home.

Last year, California had 2.8 million households in all kinds of living arrangements where housing expenses exceeded 50% of their income. That’s the largest burdened flock among the states and 14% of the 19.4 million nationwide. California’s economic rivals ranked next: Texas and Florida, at 1.7 million.

Such cash-strapped households equal 20% of all Californians, the biggest share nationally and well above the 15% U.S. share. Texas was No. 12 at 15% and Florida was No. 3 at 18%.

Renter woes

We don’t spend enough time discussing the financial burden of renters, who make up 56% of California’s home-cost-burdened population.

Remember, California is the nation’s largest rental market with 6.1 million tenant households. Sadly, California is also tops for suffocating rental costs, with 1.6 million extremely burdened households in 2024.

No. 2 for 50%-plus-burdens was Texas at 998,000. Florida was No. 4 at 856,200.

When you view this pocketbook pressure as a share of all renters, you see these tenant tensions are not unique to the Golden State.

The math shows 27% of California renters are suffering this extreme financial stress. That slice is topped only by Florida’s 29% and equals Nevada’s share. This distress is not far above the nation’s 24% share of renters facing a 50%-plus burden. By the way, Texas was No. 19 at 23%.

Or look at renter strains this way: Californians fill 13% of the nation’s 46.1 million rentals. However, Golden Staters were 15% of the 10.9 million most-rent-stressed Americans.

How did renters get here?

Last year, California’s median costs for all renters ran $2,104 a month – that’s 60% above the nation’s $1,319 and the largest expense among the states.

Texas was No. 20 at $1,475 and Florida, No. 7, at $1,812. The cheapest place to rent is West Virginia at $883 monthly.

What exacerbated the financial strain on tenants was soaring rent costs during the pandemic. The coronavirus push for larger living spaces created a rent-hike momentum that has only recently cooled. And this is not simply a Golden State upswing.

Since 2019, California tenants have seen their expenses jump 30%. Ponder that this surge was only the 32nd largest advance among the states.

Nationally, rental costs ballooned 39% over five years, with the largest increases in Idaho (57%), Arizona (52%), and Florida and Nevada (46%). Texas was No. 16 at 35%. The smallest hike since 2019 was Hawaii’s 18%.

Ownership burden

California owners fare relatively better.

Contemplate ownership expenses that include mortgage payments – and one-third of Californians don’t have a home loan – plus items such as insurance, utilities and association dues. By this math, 15% of California owners spent more than half their monthly income on housing costs in 2024 – the highest share among the states and well above the nation’s 9% slice.

Florida was No. 2 at 13%. Texas was No. 18 at 10%. The nation’s least-stressed owners live in North Dakota, where just 5% pay 50%-plus.

Despite all the economic challenges, don’t forget that California is the nation’s largest ownership state with 7.7 million living in their own home. Yet the high financial strains add up to 1.1 million California households paying more than half their income to own, also tops among the states.

No. 2 is Florida at 830,700, then Texas at 700,000.

Or look at it this way: California has 9% of the nation’s 86.6 million owners. But it’s 13% of the 8.6 million Americans who are highly burdened by ownership costs.

Owners’ remorse?

The typical Californian homeowner pays an estimated $2,280 monthly – 70% above the $1,340 national norm.

Only D.C. is costlier at $2,610 a month. Texas was No. 18 at $1,540 and Florida, No. 17, at $1,550.

Yes, the pandemic era’s once historically low mortgage rates offered significant savings to many owners. Other expenses, such as property taxes and insurance, have since skyrocketed across the nation.

So Census stats show ownership costs rose 23% for all California owners since 2019. However, that jump was just the 29th largest among the states and equaled the nation’s five-year expense leap.

Florida had the largest increase at 42%, then Colorado, Utah and Texas at 32%. The smallest cost gains were in New Jersey, up 14%.

The squeeze

One way Californians cope with pricey housing is by squeezing more than the typical number of people into their living spaces.

Let’s start with renters. Last year, California had 2.63 people living in the average rental. That’s 21% above the 2.17 nationwide average.

Only Hawaii had more densely populated rentals with 2.64 residents. Florida was fifth at 2.43. Texas was No. 8 at 2.35. The fewest folks per rental were in Vermont at 1.79.

Next, ponder how many people jam into a home they own.

Last year, the average California owner had 2.92 people in their residence, the third-highest density among the states and 15% above the nation’s 2.54 residents per unit.

Only Utah, at 3.11 people per unit, and Hawaii, at 2.98, topped California. No. 4 was Texas at 2.87. Florida was No. 25 at 2.54. The lowest density was in D.C., with 2.24 people per unit.

Density is not just about costs, but it’s certainly a sign of needed savings.

Other factors that put more people in a housing unit include younger populations (think children), size of residences (think apartments vs. houses), locale (think urban vs. rural living), and cultural preferences (think multigenerational arrangements).

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com