Dreaming of palm trees and movie magic? Los Angeles has long been a city that draws people from around the world for its entertainment industry and endless sunshine. From the laid-back vibe of the San Fernando Valley to upscale neighborhoods like Westchester and even specialized options such as Los Angeles 55+ communities, there’s a lifestyle for just about everyone. But before making the move, it’s worth asking: how much does it cost to live in Los Angeles?
The cost of living in Los Angeles is undeniably high, putting the Los Angeles cost of living well above the national average. While it doesn’t quite reach the extremes of New York or San Francisco, LA still ranks among America’s more expensive cities, with housing as the biggest factor in overall living expenses. Still, LA’s size and diversity mean you can find ways to save money by choosing neighborhoods wisely or using smart financial planning tools to budget.
In this guide, we’ll dive into everything you need to know about the cost of living in Los Angeles, helping you to decide whether or not it’s a good place to settle down for you and your family.
Los Angeles Cost of Living Index
When considering the cost of living in Los Angeles CA, the Cost of Living Index is one of the best tools to get a clear snapshot of overall living expenses. This index measures the cost of common goods and services (like healthcare, food, and transportation) against the national average. Of course, your actual budget will vary depending on household size, lifestyle, and neighborhood, but the index gives a reliable starting point to compare where you live now with LA.
The Los Angeles cost of living index is currently 149.4, which means the average cost of living in Los Angeles is about 49.4% higher than the national average. That’s a significant difference and a reflection of the city’s high cost, especially when it comes to housing. Other expenses, like groceries and healthcare, may not climb quite as steeply, but together they still add up.
So, is Los Angeles affordable? For many, the answer depends on income, priorities, and how much you’re willing to trade budget flexibility for access to everything LA offers.
Consumer Price Index (CPI)
When considering the cost of living in Los Angeles, it’s always a good idea to take a look at the Consumer Price Index. The Consumer Price Index, or CPI, is published monthly by the Bureau of Labor Statistics and reports the changes in prices that residents are paying for basic services in a city, comparing it to the national average.
According to the most recent survey, prices in Los Angeles are up 0.2% over the past month and 3.2% over the past year. Expenses like food, housing, transportation costs, and apparel rose, while expenses like gasoline and education declined.
Consumer Expenditure Survey
Another good way to analyze the cost of living in Los Angeles CA is to take a look at the Consumer Expenditure Survey. This survey is also published by the Bureau of Labor Statistics and considers living expenses and how much residents in a given area spend on things like housing, health insurance, transportation, and food every year.
Los Angeles is a part of the West region, which has the highest annual expenditures in the entire country. According to the latest survey, the average annual expenditures for residents in Los Angeles are $86,482 per year. Here’s how this breaks down by category.
- Housing: 34.4% of total budget, $29,743 (compared to U.S. average of $24,868)
- Transportation: 16.4% of total budget, $14,144 ( compared to U.S. average of $12,736)
- Food: 12.8% of total budget, $11,037 (compared to U.S. average of $9,665)
- Healthcare: 7.2% of total budget, $6,187 (compared to U.S. average of $6,042)
- Education: 1.6% of total budget, $1,384 (compared to U.S. average of $1,496)
- Miscellaneous: 1.6% of total budget, $1,377 (compared to U.S. average of $1,097)
Family Budget in Los Angeles CA
The cost of living in Los Angeles California varies from family to family. According to the Economic Policy Institute, a family of four would need to earn $134,902 per year to live comfortably in the city.
Of course, this depends on several factors, such as your family size, whether or not you’re paying for your own health insurance, and the neighborhood you live in. For example, a single person living in LA with no children would only need to earn $61,558 per year, while a couple with no children would need to earn $77,027.
Cost of Household Items, Utilities, Gas, & Groceries in Los Angeles
The Los Angeles cost of living is greatly affected by things like the average cost of groceries in Los Angeles and the average cost of utilities in Los Angeles. While these may seem like small expenses at first, they add up quickly, influencing the overall cost of living in Los Angeles. From a gallon of milk to a dozen eggs, here are a few prices of common items you’ll encounter when living in the area, all driving up the cost of living in Los Angeles.
- Steak (1 pound): $8.89
- Milk (1 gallon): $4.69
- Eggs (1 dozen): $7.49
- Potatoes (5 pounds): $7.00
- Bread (1 loaf): $4.13
- Beer (1 bottle): $10.00
- Movie ticket: $18.00
- Average cell phone bill: $66.40
- Average Los Angeles utilities per month: $203.04
Source: Numbeo
Los Angeles Real Estate Market
Housing is one of the biggest factors influencing the cost of living in Los Angeles. Homes in the trendy areas and the pricey Los Angeles neighborhoods like Hollywood make LA one of the most expensive cities in the country. With that being said, the Los Angeles housing market is cooling down, with home prices down 0.47% compared to last year. However, you can still expect to spend a pretty penny on Los Angeles homes for sale.
According to Redfin, the average home price in Los Angeles is $1.06 million. Although down compared to last year, the median home price in Los Angeles is still far higher than the national average of $442,992, driving up the cost of living in Los Angeles.
Here’s how the Los Angeles average home price compares to other California cities:
- Sacramento: $496,500
- San Diego: $931,500
- San Francisco: $1.42 million
- Bakersfield: $406,500
- San Jose: $1.5 million
Los Angeles Rental Market - Average Rent in Los Angeles
Curious about rent prices in Los Angeles? Los Angeles rent is famously quite high, driving up the overall cost of living in Los Angeles significantly. According to RentCafe, the average rent in Los Angeles is $2,768 per month, which is well above the national average of $1,754. Of course, rental prices will vary based on where you live.
Here are a few of the most affordable neighborhoods in the area that will keep the cost of living in Los Angeles a bit more manageable.
- Arlington Heights: $1,534 per month
- Pico-Union: $1,744 per month
- Hyde Park: $1,784 per month
- Sun Valley: $1,891 per month
- Sunland: $1,909 per month
- Winnetka: $1,917 per month
According to the National Low Income Housing Coalition, you would need to earn $105,000 per year ($50.48 per hour) to rent a two-bedroom apartment in the city without spending more than 30% of your income on housing.
When analyzing the cost of living in Los Angeles, you’ll likely be curious about whether it’s more affordable to buy or to rent. A good way to analyze this is to take a look at the price-to-rent ratio. The price-to-rent ratio is a formula that helps you decide whether an area is better for renters or buyers. The higher the ratio, the better the area is for renters. The lower it is, the better it is for buyers. The formula for the price-to-rent ratio is the median annual rent divided by the median home price. Let’s plug LA’s numbers in.
$1,060,000 / $33,216 = 31.9
This is a high ratio, making the area significantly more affordable for renters.
This is echoed in the ATTOM Rental Affordability Report, where they state that Los Angeles is a more affordable city for renters.
Average Salary & Household Income in Los Angeles
Earnings play a big role in how residents manage the cost of living in Los Angeles, especially given the city’s reputation for high housing costs and everyday expenses. According to PayScale, the average salary in Los Angeles is about $92,000, while the median household income in Los Angeles comes in at $79,701. These figures show that while individuals in certain industries may earn higher wages, the average household income in Los Angeles doesn’t always keep pace with rising costs, creating challenges for many families.
The average income in Los Angeles is supported by a wide range of industries, from entertainment and technology to healthcare and education. LA is the heart of the nation’s film and television industry, while also serving as a hub for aerospace, international trade, and a growing tech sector.
Top employers in Los Angeles include the County of Los Angeles (104,100 employees), Los Angeles Unified School District (97,200 employees), University of California, Los Angeles (72,100 employees), and City of Los Angeles (70,700 employees).
Income, Sales, and Property Taxes in Los Angeles
Taxes are a big part of the overall cost of living in Los Angeles, shaping everything from the price of goods to how much you keep from your paycheck and the long-term expense of owning a home. Understanding sales, income, and property taxes helps explain why the cost of living in Los Angeles is among the highest in the country.
Sales Tax in Los Angeles
The sales tax in Los Angeles is one of the highest in California. The combined Los Angeles sales tax rate is currently 9.5%, which includes the California base rate plus local additions.
California Income Tax Rate
California uses a progressive income tax system, and the California income tax rate ranges from 1% to 13.3%, depending on income level.
Los Angeles Property Tax
The Los Angeles property tax rate is based on California’s standard formula of 1% of assessed value, plus any voter-approved local measures. As a result, Los Angeles County property taxes typically average between 1.1% and 1.25% of assessed value. On a $900,000 home, for example, annual property taxes would total around $10,000 to $11,250.
Los Angeles vs. New York Cost of Living
When you compare Los Angeles and New York, both cities stand out as world-famous. They each offer incredible opportunities, but the price of daily life looks very different. The cost of living in Los Angeles is high, yet New York’s expenses reach an entirely different level, making it one of the priciest places in the nation.
Housing is costly in both markets, though in different ways. The average home price in Los Angeles is around $1.06 million, while in New York City it’s about $900,000. On the flip side, rent is far more challenging in New York. The average rent in Los Angeles is roughly $2,768, while New Yorkers face an average of $5,620.
The overall Cost of Living Index tells the story even more clearly. Los Angeles scores 149.4, already well above the national average, but New York comes in at an extraordinary 230.6.
In short, while the cost of living in Los Angeles is steep, it remains more approachable than New York City.
Get in Touch With Movegreen Today
The cost of living in Los Angeles can be steep, but for most, it’s well worth it. Now that you know the basics of the Los Angeles cost of living, it’s time to make your move with Movegreen. To discuss your move and get started with a free quote, call our Los Angeles movers today at (866) 684-7336.
