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ItalianPrincess1217's avatar

Why are things in California so much more expensive than in New York?

Asked by ItalianPrincess1217 (10086 points ) November 30th, 2009 from iPhone

For example, when I watch these house hunter shows I pay close attention to the amount these people are spending on houses. The kind of house that sells for $150,000 in my town will go for $800,000 in Cali. Why on earth do prices differ so much and how do people afford this?! Do jobs also pay higher in that state? I know people around here can’t afford housing at that price unless they inherited a family fortune or are a highly paid doctor or surgeon.

This also makes me wonder (and this could be a ridiculous question) about whether or not minimum wage is the same for all the US? Because a single person in my town making min wage would be able to rent a one bedroom apartment for around $500 and survive but if they moved to Cali and tried to rent the same apartment, they’d never make it. That apartment would be much more expensive. I just don’t get it…Can anyone enlighten me?

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39 Answers

eponymoushipster's avatar

it’s a tax for living in a place that’s not as cool.

fireinthepriory's avatar

I know that minimum wage varies by state… although of course a higher minimum wage won’t be allowing people to buy $800,000 homes. :)

I think it’d have more to do with an area’s economy in general, and the kinds of jobs that are available and the kinds of lifestyles the people there are want to have, and (more importantly) whether the people are willing to fork over that much cash in order to have that kind of a lifestyle. I’m sure there’s a more complex economical reason than that, though, so hopefully someone who knows all about it will come explain it to me, too!

Val123's avatar

Because the people who live there are willing to pay more because of the scenery or the social life…which, in the end, whatever value it originally had gets overwhelmed and worthless because of the sheer number of humans….

tinyfaery's avatar

States have their own minimum wages. I forget what CA is. Plus, houses are not that price all over the state. Housing prices are high where people have money. How about Manhattan real estate?

And not everything costs more. I bet I can get an avocado way cheaper than someone in NY.

ItalianPrincess1217's avatar

@Val123 & @fireinthepriory You said people are willing to fork over the cash in order to have that lifestyle but the question is, how do they earn that kind of cash to be able to do this? Jobs must pay a lot more?

tinyfaery's avatar

Yes. Our jobs pay more. It’s the type of business. Money in CA comes from computers and entertainment (agriculture, too). These industries pay big.

DominicX's avatar

What @tinyfaery said. Houses in the Bay Area are very expensive because this is the Bay Area. This a very desirable place with high-tech companies and many people here have a lot of money. Same goes for the L.A. area with the entertainment industry. Not to mention we have better weather than many states and that combined with the high paying jobs causes California to be a very desirable place to live. We also have more people than any other state. More people + high paying jobs + desirable place to live = more expensive homes. Still, California is not the state with the highest per capita income (whether it’s household, personal, etc.) It routinely ranks around #10 on that. Connecticut, Massachusetts, New Jersey, New Hampshire, etc. have higher per capita incomes.

Example: A friend of mine knew someone who was living in a 1,000 sq. ft. home in Palo Alto, CA. His family sold it for $850,000 and bought a 4,000 sq. ft. brand new home in Atlanta, GA in a very nice part of town for $500,000. Insane. But the thing is, when his family bought the Palo Alto house in the early 90s, it was around $200,000. The price went way up.

ItalianPrincess1217's avatar

Hmm. I guess I’m understanding it a bit better now. I suppose the same goes for the state of NY (where I live). In New York City housing is much more expensive than here in my small little farmers town. Even the food, clothing, etc are at a much higher cost. Apparently people have a big desire to live in an overly populated place with crowded streets, crazy drivers, and shitty weather, and they’re willing to pay a lot more for that location. Strange.

Val123's avatar

@ItalianPrincess1217 Yes, to a certain extent but..it’s not a fair comparison in many ways. What is considered a fair salary in Kansas of $19,000, is considered equally fair at $30,000 in CA because of the difference in the cost of living. But, the cost of living in CA eats the higher salary up faster than the cost of living does to the person in Kansas. For example, out of the California person’s $30,000 salary they may pay $1000 a month for a second-rate apartment. However, In Kansas that same, second-rate apartment would cost $350 a month…so the $1000 a month rent in California, for a 2nd rate apartment, is more than double what you would pay in Kansas, although your income isn’t double. So….the percentages aren’t good, and, in the end, it crashes because it becomes a place not worth living in anymore (to wit: Seattle)

tinyfaery's avatar

It’s still not Kansas.

Sarcasm's avatar

The CA minimum wage is $8, since January of ‘08.
Also, for tip-based jobs, like waitering/waitressing, you get paid standard minimum wage, plus tips. I remember hearing people say in other states that tip-based jobs have some “special” minimum wage that’s ridiculously low, like $1.50/hr or something.

God it’d be nice to get a 1bed apartment for $500. I pay $550 to live in a 4bed house with 3 other guys.

Mamradpivo's avatar

Supply and demand. As giant as California is, most people live in only a few megacities and suburbs on the coast. So yeah, more people equals higher demand for houses. People do make more money (in general) in California, but the cost of living is equally high.

Also, current political woes aside, California is a pretty nice place to live: Mediterranean climate, plenty of pretty places, lots to do. And people pay a premium for that.

ItalianPrincess1217's avatar

@Sarcasm Yeah a lot of places around here don’t pay waiters minimum wage. They give them something like $3.50 plus tips. It’s ridiculous. Yikes! I couldn’t imagine paying that much! And $500 around here is on the high end of one bedrooms! I only paid $325 for my first apt. And my mortgage right now is only around $500 a month! Come move to NY!

nzigler's avatar

CA isn’t fucking freezing in the winter. You spend all the money you save in NY on coats. Also, cigarettes are so expensive in NY it evens out.

Sarcasm's avatar

@nzigler what’re you talking about? 50 degrees at night is suuuuper cold!~

nzigler's avatar

@Sarcasm, I know my CA brother, I know. But remember we live in the land of Snoop, sun, and surf.

Winter is only a month long anyway.

DominicX's avatar

@Sarcasm Seriously. I have to ride my bike to class in the morning in 45 degree weather and I feel like I’m going to get pneumonia…

ItalianPrincess1217's avatar

Haha 45 degrees?! Try -10 degrees!

tinyfaery's avatar

It’s December and I’ve still yet to see my breath in the air.

SeventhSense's avatar

Princess you obviously live in the country. Where I live in NY 500 won’t get you a closet and if you live in Manhattan for a while even San Francisco is reasonable.

And it’s not uncommon to make 200–400 a night in tips as a waiter in the city. There are waiters who make six figure incomes. You’ve got to head south girl.

YARNLADY's avatar

You obviously aren’t talking about New York City. My Father In Law sold two ‘flats’ in New York in the 1980’s and made enough commission money to retire in San Diego for the rest of his life.

ItalianPrincess1217's avatar

As I stated above, I live in a small town full of farm land. I’m aware that NY city has much higher costs in general (which I also stated in an above post).

DominicX's avatar

@ItalianPrincess1217

Yeah, but California has that too. I was just looking at Alturas and the houses that have sold there within the past year or so have been in the range of $58,000—$245,000. The Bay Area, San Diego Area, and L.A. Area are the most expensive areas.

SeventhSense's avatar

NEW YORK (CNNMoney.com)—The price of a slice of the Big Apple was on the rise in the first quarter, reversing a slight decline in the fourth quarter of 2006, according to several reports released Tuesday.

Estimates of the average price of a New York City apartment ranged from $1.28 million to $1.36 million. Reports were issued by Brown Harris Stevens, the Corcoran Group, Halstead Property and Prudential Douglas Elliman.

ItalianPrincess1217's avatar

@SeventhSense Yep. I know. NYC is expensive. As is parts of Cali.

YARNLADY's avatar

Here in Northern California, we have three bedroom houses selling from $40,000 and up.

SeventhSense's avatar

@ItalianPrincess1217
Location Location Location. People want to be near the coasts, industry and media. That’s where the money is and that’s where the demand will be.

ItalianPrincess1217's avatar

@SeventhSense I figured that part out but what I was confused about was how people could afford it. Where I live, there are very few high paying jobs available. So I assume the big cities that everyone desires to live in offer more jobs that are higher paying?

SeventhSense's avatar

Yes. Generally

YARNLADY's avatar

@ItalianPrincess1217 In many places it is necessary for families to double up in the same house, and at least both parents work, also the adult children. Here in my neighborhood, several generations of family all live in the same house, the Grandparents, the parents, their married adult children, and all the grandchildren.

Another solution is for wage earners to hold down more than one job, and rent out rooms in their homes.

DominicX's avatar

@ItalianPrincess1217

The cities definitely do offer more high-paying jobs and more jobs in general. The big cities and surrounding areas are where you’re going to find your lawyers, your VCs, your computer companies, your big businesses, your surgeons, your CEOs, your commercial airline pilots, etc. But also remember that a lot of people purchased their house before the prices went up so drastically. If a house that sold for $200,000 in 1991 sells for $850,000 in 2007, then the rate of increase is pretty rapid.

Val123's avatar

If I could go back in time….In 1970 my Aunt and Uncle bought 5 acres, along with several other families who bought five acres apiece (or more), in what was a-then rural town about 20 miles from Seattle…The land they bought was outside of the town’s city limits, actually. It was in the country. These 15 or so families bought the land a way that they cut out a really nice, huge chunk of beautiful, Seattle land. The kind of land that Seattle is famous for:
(This is a picture of a small portion of their back yard) (Ask me again why I get a hinky feeling that a Yeti is going to come out of da woods and GET me when I stand out there, especially at night?! I can hardly stand it! I don’t think we’re in Kansas anymore, Toto!)

Just guessin’ they probably paid $5000 an acre in 70. Maybe less. Today those acres will sell for probably $50,000 each,or more. The house, that my Uncle built with his own hands for, probably, 28,000, would probably sell for $2,000,000.

It’s a very rare and special place because when you get to the end of the winding, single lane, non-paved, two-mile long road, leading past the secluded houses and giant, ancient trees, it’s BOOM! Instantly, in your face traffic and people and business and fast food joints. It’s melted into Seattle so that there is no seperation at all. It’s really, really sad, actually. The original beauty of the land is completely eclipsed by the sheer volume of humanity and their machines and buildings…

YARNLADY's avatar

@Val123 I could echo that story, with one difference. The family members who bought land in Colorado each had several children, and when the children grew up, they built houses on their land for each one of them, and the third generation also did the same thing.They installed a water system, a sewer system, and electrical plant. They named the resulting town, and now it is a thriving community, not the beautiful, unspoiled, forested land it was in the good old days.

Val123's avatar

@YARNLADY The best part about my Aunt and Uncles place is it IS still the beautiful, unspoiled forested land it used to me! It’s an oasis in the middle of the city…

DominicX's avatar

Yeah, well, I happen to find cities (especially big cities) beautiful, but that’s just me…

Val123's avatar

They sure can be! Did you see the pic of my Aunt and Uncles back yard?

YARNLADY's avatar

@DominicX In pictures I think cities and snow are both beautiful. It’s only actually being in them that is so bad. I hate the smell of cities and the temperature of snow.

Val123's avatar

Seattle is really beautiful!!

talljasperman's avatar

Hookers , ex governor Eliot Spritzer pays from$1000 to $10,000 for an ultra escort.

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