The Golden State lives up to its name in several ways. Its history, scenery, and, unfortunately, its cost of living keep the motto alive. As a whole, California is the third most expensive region to live in after Hawaii and Washington, DC.
That being said, the cost of living in California still varies widely by locality. On one extreme, the Bay Area, mostly San Francisco, is the priciest part of California to live in. Its cost of living is a whole 17.4% higher than the United States national average. However, small-town California can be amazingly affordable in comparison. In fact, a less than 3-hour drive from San Francisco takes you to significantly cheaper housing.
Let’s look at your alternatives to the expensive metropolises of California and the many benefits of relocating.
The answer depends on your budget range and the type of location you want to live in. For that reason, we’ll go over what locations have to offer in terms of cost of living, scenery, local amenities, and nature.
To start, let’s look at some of the cheapest places to live in California. If you’re looking for a far less expensive life in a more rural environment, these are some places to consider moving to.
If you’re looking for a true escape from city life at a low cost, Clearlake is an excellent option. The town of Clearlake is on the east bank of its namesake lake northwest of Sacramento. However, it’s known to also have clearer air than many of the other options on this list.
The cost of living in Clearlake is still relatively high, but the median housing costs are low. The median home price is just $230,000. However, that cost may have risen since 2020, and seasonal changes in housing costs are wider in Clearlake than most entries to this list.
Hanford is one of the cheapest places to live in California. The median home cost, the biggest differentiator in costs of living, is just $271,100. For comparison, this is just 62.2% of Sacramento’s median home cost.
Hanford is one of the affordable places with a small-town life with regular city resources. While it’s an exceptionally cheap place to live in and is far from major cities (Fresno is the closest neighboring city), it has all the amenities you need.
Hanford has three department stores (including Walmart and Target), a hospital, and three high schools packed into the small town’s area.
Being close to Hanford, it should be no surprise that this patch of the Golden State also offers low housing costs. Low housing costs mean an overall much lower cost of living, seeing as housing is by far the largest regular living expense.
The median home cost in Visalia is $306,600 as of the beginning of 2022. Most other items on the Council for Community and Economic Research cost of living index are not much higher than comparable alternatives, including Hanford.
Nearer to Fresno than the last two options, Madera’s low cost of living is only beaten by Hanford. State Route 99 of the Golden State Highway cuts right through the center of Madera, offering easier access to Merced and Fresno.
In terms of the median home cost, Madera’s is just $309,300. In addition, items like healthcare, transportation, groceries, and other categories of standard expenses are all marginally less than those in nearby Fresno. The overall cost of living is cheap relative to most other places in California.
Relative to all the other entries on this list, including these remote small towns, there’s little to do in Madera. If the small town life is what you’re looking for, the quiet may be a welcome change for you.
Any metro area in California is going to come with a high cost of living. But if you’re considering moving, it’s worth looking at the metro areas that, although more expensive than the national average, are cheaper than Los Angeles or San Diego.
These areas are relatively pricey, but they also have closer access to beaches or other tourist destinations that southern California is famous for.
If you’re from Los Angeles and trying to escape the chaos and the high cost of living while remaining close to the city, this is a balanced alternative. Rancho Cucamonga is one of Southern California’s cheapest localities but is less than an hour’s drive from LA.
WalletHub listed Rancho Cucamonga among the best places in the US to raise a family. This is partly due to the exceptional public schools and remarkably warm community.
The median home price in Rancho Cucamonga is $621,900 as of early 2022. This is pricey real estate compared to the home costs of the previous towns listed. However, it offers massive savings when compared to nearby Los Angeles, where the median cost is 42% higher.
In terms of the overall cost of living index, LA is almost 28% more expensive. This makes Rancho Cucamonga a great alternative if you still want proximity to the more expensive and well-known localities of the Golden State.
Located almost dead-center between the Mendocino and Plumas National Forests, Chico offers a balance between cost and Californian glory. The cost of living in Chico is slightly higher than the US national average; however, housing, which is a primary driver of the cost-of-living indexes, is relatively cheap. Housing costs in Chico are almost equal to the US national average.
If you’re used to big city life or like having access to it, Chico is a bit out of the way. However, if you’re a nature lover and are looking for other things in life, Chico could be the best place for you.
Bakersfield is located right beside Interstate 5 and offers a perfect balance between proximity to the big cities and cost of living. It offers plenty of space and a cost of living 0.8% lower than the national average.
While not exactly the cheapest place, the cost of housing is 12% cheaper than the national average. So, if you’re moving from Los Angeles but don’t want to go too far, Bakersfield is a budget friendly option with great real estate.
Fresno offers a balance between urban amenities and low costs of living. It isn’t like LA, but it isn’t a small rural town either. Fresno is one of California’s safest cities with relatively low crime rates. It’s also a diverse and inexpensive place to live.
Property prices are not too bad in Fresno. The median home cost in Fresno for early 2022 is $316,400, making it one of the most affordable places on our list. Almost as cheap as many of the small towns we covered in the previous section. Also, costs for products and services are lower across the board when compared to the elite cities nearer to the coastline.
The average home cost in Stockton is less than half of that in Los Angeles County. It isn’t as pristine or low-crime a city as most of our other entries. However, it offers a more central location not far from the larger urban centers of Sacramento and San Francisco.
Relocating to an area with a lower cost of living certainly has the benefit of affordability. But does moving to an affordable place make sense in other ways?
Despite the common belief, Americans aren’t moving that often. More Americans say they don’t want to live in cities, but far fewer are actually following up on that sentiment and moving. Only 8% of Americans moved at all from March 2020 to 2021. So, why is there so much discussion about relocating, particularly in southern California?
Despite lower numbers overall, two very clear trends are clear:
Both of these are reversals of previous trends of people vying to move closer to more cosmopolitan and expensive areas. This makes sense for a few reasons.
Moving to a lower cost area won’t necessarily save you more money. After all, you only save if you spend less while not receiving a lower income for having moved. If you move to a small town but are forced to take a job for a much lower salary, the net benefit from having moved decreases. Your income must still exceed your expenses for the move to be worthwhile.
When you can work remotely for the same salary, moving to a lower cost of living area makes perfect financial sense. So, if you can work remotely but spend less, the financial incentive to relocate to a cheaper part of California is much stronger.
Moving to a more affordable part of California makes all of the following cheaper:
Regardless of your employment status, your net worth can benefit greatly from a well-planned relocation. If your home is in an expensive real estate market and you sell at peak prices, you can buy or rent much more space in an area where the peak isn’t so pronounced. You can then use the difference to invest, start a business, remove burdensome debt, and so much more.
This is an understated benefit of relocating. You can essentially increase your living space, tackle your debt, open yourself to opportunities, and place yourself in a much better financial position with a well-planned move.
Although we’ve been speaking more about the needs of property owners, but for most of the points we’ve covered, the same principles apply to renters. Where the median home cost is lower, data shows that renting is correspondingly lower as well.
If you’ve yet to buy your first home, relocating still makes sense. In fact, you can get more bang for your buck with the same budget, netting you far more space and better amenities. And if you can make a similar or better income in the new location, you’ll find it much easier to save up for major purchases or help you with other long-term financial goals.
Lower taxes is yet another financial incentive to move to a lower cost area in California. Places with a lower cost of living often also have lower tax rates. This is not as much of a benefit if you’re staying in California instead of relocating to another state. However, you can potentially save in a few areas like municipality and county taxes.
If you’re relocating in California and hoping to save money, you’re almost certainly moving from a more urban area to a less urban area. If city life isn’t for you, relocating to a more rural area can have a profoundly healthy effect on your mental wellbeing. However, if you like city life, you may prefer a relocation option that keeps you near an urban area.
In general, buying beats out renting. Simply put, if you’re paying for a mortgage, you’re building equity and eventually will own an entire property, which is a significant asset. There are no returns on your investment for paying rent.
While buying is generally better than renting, unique situations arise where renting can make more sense. This is more true given the context of relocation.
Moving to a new town, even within the same state, is a significant decision. If you were to buy a property while doing so, you’d truly be invested in your new local community. At the same time, you won’t necessarily benefit from property ownership in a new real estate market.
In many towns where home prices are cheap, the trend is going downwards. That means you may end up spending more/taking a larger mortgage than you will ever be able to recover from the property in the future.
The above points may be fine if you’re certain you intend to stay in your new home. But where the future value of your investment (in a new property) is as uncertain as your desire to stay in town for a very long time, renting perhaps makes more sense.
A more finance-centered argument can be made for choosing to rent as well. The upfront costs of purchasing a house are significantly higher than the upfront costs of signing a lease. In addition, buying a house leaves you responsible for renovations and the more expensive home maintenance costs.
According to the National Association of Realtors, the monthly cost of homeownership typically becomes cheaper than rental costs after 3 years. This is in large part due to the tax savings provided to homeowners.
If you’re a renter in one of California’s more pricey urban centers, you can get an even better deal. First-time home buyers have access to special government loan programs that those who are selling to buy another home do not. These loans come with low interest rates and are insured by the Federal Housing Administration, providing added security for a lower cost.
As we’ve already mentioned, to buy a property is to make a significant investment. But after years of payments, you’ll own a valuable asset. If you’re sure you’ll live in your new home for decades to come, even potential depreciation of your home’s value will likely not be an issue for you.
If planting your roots in a location is your goal and is more important than retaining mobility, buying a home makes much more sense than renting. After you’ve paid back part of your mortgage, you can also take advantage of your home’s equity.
Equity as collateral can get you some of the best loan terms you can find on the market, with the obvious risk, of course, of using your home as the collateral.
Relocating has been a hot topic for Californians during the last few years. Moving isn’t easy, but the abundance of great locations inside the Golden State make the prospect of relocating more appealing. If you’re moving from a larger city like San Diego, just a few hours’ drive will take you to: