How Much Does a House Cost in California?

California is one of the best places to live in the USA, with many intriguing features such as the beautiful scenery, Hollywood, the Silicon Valley for tech start-ups, and the lovely climate. However, it’s also one of the most expensive places to own a house in the country, but this hasn’t deterred the enormous demand for homes in the state.

The average cost of a house in California is $793,100, with the prices projected to rise by 5.2% to $834,400 in 2022. Prices range from city to city, with a typical single-family home in Sacramento having a median price of $472,000, while San Francisco has a median price of $1.9 million. 

While the high prices can be a challenge for many people, they are also a sign of California’s strong economy and healthy job market. The state is home to some of the largest and most successful companies in the world, such as Apple, Google, Facebook, and Tesla. This fact has led to an influx of new residents over the past few years, contributing to the high demand for housing.

Cost of a house in California in 2022

The average home price in California is around $793,100. Typically, people spend between $550,000 and $750,000 on buying a house. 

When buying a home, you should understand the local real estate market to get the best price and all the costs involved. Here are the most current numbers on house prices in California.

There is an immense demand for houses in California, so the current number cannot meet the demand. All the major cities in California have experienced a rise in median prices of homes in 2022 as compared to 2021.

Many reports show median house prices in California rising to over $800,000 in 2021 for the first time in history. Where the median price for a single-family home in California was $818,260 in May 2021.

From May 2020 to May 2021, the San Francisco Bay Area had the highest year-over-year gain of 38.9%, followed by Southern California (33.1%), the Central Coast (32.6%), the Central Valley (27.1%), and the Far North (22.1%). The 30-year, fixed-mortgage interest rate averaged 2.96% in May 2021.

With that said, the Far North has the lowest median house price of $380,000, and the San Francisco city has the highest median price of $1,900,000.

The median price of houses in California’s regions:

San Francisco Bay Area$1,340,000
Southern California$752,000
The Central Valley$445,000
The Central Coast$900,000
The Los Angeles Metro Area$700,000
Orange County$935,000
Riverside County$550,000
San Bernardino County$485,750
San Diego County$743,000
Ventura County$751,000
Inland Empire$510,000
Far North$365,000
San Francisco$1,900,000
Source: Car.org

When buying a house in the region, you will pay a good faith deposit, usually 1% of the purchase price, to the seller to let them know you are serious. After which, they will stop advertising the house because you have shown your commitment. Once you are ready to buy/mortgage the home, other fees involved include:

  • Home inspection to identify if the home has any problems, such as electrical or plumbing.
  • Appraisal fees – This is to know an estimate of the house’s current market value.
  • Title insurance – This will enable the title search to verify and ensure that the title doesn’t have any issues, like liens.
  • Recording fees – This is a fee paid to show the change of ownership.
  • Notary – Paid to verify the signatures involved during the change of ownership.
  • Flood certification.
  • Processing fees – To cover the paperwork. 
  • Down payment of a mortgage.
  • Mortgage insurance – Paid if you make a down payment of less than 20% of the house’s purchasing price.
  • Mortgage origination for starting the mortgage loan.

The closing costs above will add to an average of 2% to 3% of the purchase price of a house in California.

Well, you might know that California is more expensive than places in the country, including prices on buying or building a house. It is difficult to find affordable real estate in San Diego and other major cities in California, but it’s not impossible. Californians simply have challenges that many other states do not have.

San Francisco’s cheapest place to buy was in Bayview, with a median price of $994,500, making it the only neighborhood in San Francisco that still averages less than $1 million for a house. Even in the Excelsior, the average housing costs have risen to more than $1,16 million.

Nonetheless, there are many places with more affordable houses, which can be bought for even under $500,000. Yet, they are all located far from main cities like San Francisco, Los Angeles, or San Diego. It also might not be a single-family house but smaller homes, townhomes, fixer-uppers, or condos.

Average house prices in California in 2022

In 2022, the average cost of a house in California is $437 per square foot. The beautiful area of Orange Country next to Los Angeles has some of the highest house prices per square foot – $593. However, Beverly Hills beats all records with $959 per square foot.

The location and size of the house will at most affect the overall cost. That said, San Francisco has the highest average price of $1,297,511 for a house. Other cities and their average home price include:

  • Bakersfield – $330,317
  • San Diego – $800,746
  • Sacramento – $440,447
  • Los Angeles – $816,438

The purchase price of houses in California is among the most expensive in the country because:

  • Demand for housing is higher than the supply of houses. The rate at which people move to California is too high to satisfy the current demand. There are a few houses along the coastal cities where many Californians work.
  • More people prefer to live, work, and own a home in California. This is especially common in areas like Silicon Valley, San Diego, and Los Angeles, leading to high competition for rental housing.
  • In most parts of California, getting the local government approval to develop a house is cumbersome, expensive, and takes a lot of time.
  • Land, building materials, and labor are more expensive than any other state.

How much money do I need to buy a house in California?

To buy a house in California, you will need to make a downpayment of at least 20%. With an average price of $793,100, you need around $160,000 to get a mortgage.

Furthermore, homebuyers typically have to pay 2%-5% of the home’s price in closing costs. Considering the average home price of $793,100, that adds another $15,862 up to $39,655 as side expenses.

The location plays a significant role in the initial sum you need to purchase a house in California. So the average home price in San Francisco is $1,297,511, while it’s only $440,447 in Sacramento.

How much salary do you need to buy a house in California?

A gross salary of around $124,000 per year would afford you a small house in California that costs about $500,000. US banks will give you a mortgage on a desirable sum if the monthly loan payment is less than 28% to 32% of your net monthly income.

Depending on financing conditions, a $500,000 house will incur mortgage, insurance, and taxes of between $3,000 to $3,500 monthly. In addition, a buyer will need to have approximately $100,000 for a down payment.

On these terms, one should expect to pay up to $3,100 per month, where your mortgage will have a 30 years term and interest of 4% (quite common). However, in 2021 it’s averaged at 2.96%.

Recommended expenses for a house must be lower than 32%. With the current set up, we take 30% of the monthly income. With that said, your monthly salary should be $10,333. This brings us to the annual gross income of $124,000.

If you want a bigger house or in a better location, an annual salary of at least $148,000 will afford you an average house in California, considering the median price of $793,100.

With this salary, you can pay a monthly payment of $3,700 for a 30-year fixed-rate loan, including insurance and taxes. The monthly payments would follow a 20% down payment and a compound interest of 3.28%.  

Housing affordability is a major problem in California. It’s always a better idea to buy a house together with your partner. In fact, it might be the only way one can afford a home in California.  

Nonetheless, we are talking about some of the cheapest houses here. If you want to buy a median-priced single-family home in San Francisco, San Mateo, Santa Clara, or Marin areas, be prepared to make much more. Currently, you will need an annual income of more than $300,000.

For example, a median-priced home in San Mateo County now requires nearly $10,000 in monthly payments. Considering the following terms:

  • 20% down payment
  • 30-year mortgage
  • tax and insurance costs

A potential buyer should have enough money for a downpayment to reduce the total mortgage load but also get better interest rates and conditions.

How much does it cost to build a house in California?

The average cost of building a house in California is $387,000. This will, however, depend on the location and building style. That said, the price will range from $104,000 to $1,035,500.

Apart from land, the cost of building a house in California is influenced by many factors, including government fees, materials, and labor. The California state government has allowed specific building standards to be followed. Amenities such as insulation and heating and cooling systems should achieve certain energy efficiency goals.

Local government charges

The local government charges a development levy of about $4,000 to $60,000 per unit (excluding fees on water-related features) for a single-family home. The levy in California is among the highest in the entire country.

In cases where an owner wants to demolish an existing building and replace it with a new one, the local government charges what is called a “reasonable fee,” which can be as much as $27,000. This ensures that the new development meets all the current building code requirements.

Building material

Building material will consume  50% of your total building cost. The following are the average costs of the building materials:

ItemPrice per square foot
Concrete$4-8$
Flooring $9–$32
Lumber$3–$6
Drywall$0.50–$1
Siding $2–$50
Flooring$9–$32
Electrical wiring$6–$10
Roofing$1–$20
Plumbing pipes$5–$7
Source: Homeadvisor

Labor costs 

The labor cost will go to several teams of people involved in your building project. These charges will vary from one construction management company to the other. Nonetheless, here are some selected common fees:

ItemEstimated costs
Construction management5%-15% of the total building cost
Plumber$45–$200 per hour
HVAC installation$500–$2,500
House framer$7–$20 per square foot
Driveway paving$5–$10 per square foot
Electrician$50–$100 per hour
Roofer$5,000–$10,000
Landscaping$3,000–$15,000
Solar panel$8,500 
Source: Homeadvisor

The cost of the foundation will depend on the slope grade of California because California’s landscape varies from place to place. Nevertheless, it will cost between $1,300 to $ 14,280. 

HVAC Systems

The state government requires Californians to install an HVAC (Heating, Ventilation, and Air Conditioning) system in their homes. The cost of a basic unit starts at $3000. However, more elaborate and sophisticated systems can cost up to $25,000.

The state has also mandated that all new construction must include solar panels. While this adds to the initial cost of building a house, it is seen as an investment in the future as homeowners will save on their energy bills in the long run.

Likewise, you will need a furnace, which costs around $5,000, for the colder seasons, especially in San Francisco and Redding.

Cost per square foot

The cost of building per square foot will depend on the type of home, ranging from $105 for an average standard house to $445 per square foot for a luxury home. You might also consider the building styles in California to determine your cost of building. Below are some types and the cost of construction:

Style of the houseCost per square foot
Contemporary$180 to $400
California Ranch$70 to $330
Cape pod$350 to $500
Mediterranean$350 to $500
Victorian$150 to $350

Some notable costs for interior and exterior finishings include:

Drywall installation$1,000 – $2,620
Countertop installation$2,200–$4,800
Flooring installation$2,080–$5,840
Custom cabinet$2,800–$7,800
Interior painting$1,300–$3,680
Fireplace installation$600–$4,300
Appliance$3,000–$15,000
Windows installation$3,120–$8,600
Patio$2,520–$7,570
Exterior painting cost$2,890–$6,130
Pool$15,080–$49,450

The land cost depends on the location, and the price of a plot ranges from $50,000 to $1 million in some prime areas in San Diego. An architect will initially charge around $9,500, and if you need more work from them, you will pay 8% to 15% of your total building project’s cost.

As you can see, building and owning a house in California can be pretty darn expensive.

If you’re considering purchasing a house in California, it’s essential to be aware of the current market conditions and have a budget that takes into account the high prices. With careful planning and research, you can find a home that meets your needs and fits your budget.

Remember, the high cost of living in California is offset by the many benefits of living in this amazing state. So, don’t let the prices deter you from making your dream of owning a home in California a reality.

Anna

Anna is an experienced expat and writer. She has been living abroad for over 6 years.

Recent Posts