4 Costly Reasons To Rethink Living in California (Real Estate Is Just the Start)
California is called the Golden State for several reasons -- including the golden sunlight that bathes much of the state and the riches to be found there. That helps explain why California ranks first among the states in both population and gross domestic product. But those leads are shrinking amid a recent trend that has seen both residents and businesses move out of the state and settle elsewhere.
California's population story has shifted noticeably in recent years. After revisions to earlier estimates, the state has now posted consecutive years of population growth. In 2024, California added more than 100,000 residents, reaching 39,529,000 people as of January 1, 2025. This marks the third consecutive year of population growth following two years of declines during the pandemic.
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Still, the underlying pressures haven't disappeared: net domestic out-migration remains a persistent drag. Meanwhile, high-profile companies like SpaceX and Chevron are among the hundreds that have left California over the last half-decade or so.
Much of the problem has to do with finances: high home prices, high costs of living and high exposure to natural disasters that put property at risk. Here are four financial reasons to move out of California, including real estate investments.
Expensive Housing
This remains a well-documented problem in California. The statewide median home price hit a new all-time high of $910,160 in April 2025 — up sharply from the $746,667 figure cited just a year earlier. California home values remain roughly 2.5 times the U.S. median, which stood at about $404,000 as of early 2025.
As of March 2026, about 39.6% of homes in California sold above list price — still a sign of competitive conditions, though down from the 52.1% seen in mid-2024. Nationally, the comparable figure was lower, reflecting that California's market remains more competitive than most of the country. Only about 16% of California households could afford a median-priced home in 2025, and just 46% could qualify for even a bottom-tier home mortgage — down from 57% in 2019.
Natural Disasters
Real estate is not just an investment -- it's also a physical piece of property. And in much of California, those properties are at risk of being wiped out by wildfires, earthquakes and other natural disasters.
Recent examples include the devastating wildfires that affected the Los Angeles metropolitan area and San Diego County in January 2025. There was also the case of the coastal city of Rancho Palos Verdes, which got hit with massive landslides in 2024 that led to power outages and threatened more than 100 homes.
The landslides were the result of a couple years of heavy rains, according to experts. In case you haven't heard of Rancho Palos Verdes, it ranks as one of the richest retirement towns in America. Now many of those retirees face the prospect of losing their homes to extreme weather conditions.
According to a Climate Change Risk Index compiled by SafeHome.org, California ranks No. 10 in the country in terms of its exposure to extreme weather events.
High Taxes (But Only in Some Areas)
California ranks as the most expensive state in the country when it comes to state taxes on retail purchases, at 7.25%. In terms of state income taxes, California has the highest upper-income rate at 12.3%, though the lowest earners face a comparatively small 1% rate.
On the bright side, California is not among the most expensive states for property taxes.
High Costs of Living
California recently ranked as one of the priciest states in the country in average cost of living, according to a GOBankingRates study of U.S. government data. The Golden State ranked third -- behind Hawaii and Massachusetts -- with a cost-of-living index of 139.7.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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