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Arizona vs California: Housing Cost of Living Compared

Troy Elston, REALTOR Avatar

Posted by Troy Elston, REALTOR on March 13, 2023

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If you’re thinking about moving to Arizona from California, one of the most important factors to consider is housing cost of living. In this article, we’ll compare the housing cost of living in Arizona to California by discussing median home values, rent prices, affordability, property taxes, and housing market trends.

Here’s a summary of what you’ll find on this page:

Housing Market Overview

It’s well known that the cost of living in California is notoriously high, especially when it comes to housing. Many residents of California are finding that they can no longer afford to live in the Golden State and are seeking more affordable options elsewhere. One of the most popular destinations for Californians is Arizona, where the cost of living is generally lower, particularly when it comes to housing.

Median Home Prices

median sale price in california for january 2023 2020-2023
median sale price in arizona for january 2023 2020-2023

The cost of housing is one of the biggest factors that can impact the cost of living in either state. California is known for having some of the highest home prices in the country, with the median home value in 2021 reaching over $800,000. In contrast, the median home value in Arizona is around $330,000. However, it’s important to note that certain areas of Arizona, such as Phoenix, Scottsdale and Paradise Valley, can have high home prices as well.

According to data from Zillow, the median home value in California as of January 2023 is $688,100. That’s  a significant difference from just two years earlier in 2021, and it’s partly due to factors such as limited supply and higher demand in particular California cities. 

It’s absolutely worth noting that median home values can vary widely depending on location within each state. This data suggests that home buyers in Arizona can expect to pay significantly less for a home compared to those in California.

The California to Arizona Migration

The number one reason home buyers I’ve helped in the past make the move from California to Arizona is the difference in home prices. Although many look to Arizona as a place to retire, some home buyers end up buying multiple investment properties in addition to their personal residence. I often find that Arizona home buyers from California appreciate the fact that we have a much lower cost of living. Some buyers have even told me that they were escaping a failed political system.

The Table Below shows the top 10 states that contributed domestic migrants to Arizona. During the period, California contributed by far the most migrants to Arizona. California alone accounted for 23.9% of domestic migrants to the state.

California 64,087
Washington 17,091
Texas 15,496
Colorado 13,914
Illinois 11,974
Florida 9,694
Oregon 9,137
New Mexico 7,763
Utah 7,426
Minnesota 7,348

Rent Prices

For those who are not in a position to purchase a home, the cost of renting is also an important consideration. The median rent in California as of January 2023 is $2,738, which is significantly higher than the national average of $1,529. In contrast, the median rent in Arizona is $1,539, which is closer to the national average. According to data from Apartment List, rent prices in Phoenix, Arizona, are about 30% lower than in San Francisco, California. Keep in mind that factors such as demand and supply play a role in these differences, but it’s also worth considering the income levels and job markets in each state.

Home Ownership Rates

The home ownership rate in California as of the third quarter of 2022 was 54.7%, which is below the national average of 65.4%. In contrast, the home ownership rate in Arizona was 65.6%, which is slightly higher than the national average. This data suggests that home ownership may be more achievable for residents of Arizona compared to California.

Housing Affordability

The high cost of living in California has resulted in a housing affordability crisis, with many residents unable to afford to purchase a home or pay high rent prices. According to data from the National Low Income Housing Coalition, in California, the hourly wage required to afford a two-bedroom rental at fair market rent is $39.03, which is more than double the state minimum wage of $15 per hour. In contrast, in Arizona, the hourly wage required to afford a two-bedroom rental at fair market rent is $21.57, which is closer to the state minimum wage of $12.15 per hour.

Here are some common contributing factors that affect housing affordability:

State Taxes

Both Arizona and California have state income taxes, with California’s rate being one of the highest in the country at a maximum of 13.3%. In contrast, Arizona’s state income tax rate maxes out at 4.5%. However, California does not tax Social Security income, while Arizona does.

Property Taxes

California has some of the highest property taxes in the country. There, property taxes are based on the assessed value of the property and are limited by Proposition 13, which limits increases in assessed value to no more than 2% per year.

Utilities

Arizona has lower utility costs than California due to its mild winter climate. However, during the summer months when air conditioning is necessary, electricity costs skyrocket in Arizona. California is known for having some of the highest utility costs in the country.

Groceries

The cost of groceries in California is generally higher than in Arizona, with some items costing up to 40% more! This is partly due to California’s higher minimum wage, which can increase the cost of goods and services.

Healthcare

Healthcare costs in California are generally higher than in Arizona. According to a study by the Commonwealth Fund, California ranks 35th in the country for healthcare affordability, while Arizona ranks 25th. This can be attributed to factors such as higher healthcare provider costs and a higher cost of living in California.

Education

In-state tuition at public universities in California is generally higher than in Arizona. For example, the University of California system charges over $14,000 in annual tuition for in-state students, while Arizona State University charges around $10,000. However, it’s important to note that both states offer a range of scholarship and financial aid options that can help offset the cost of education.

Dining Out

The cost of eating out in restaurants is generally higher in California than in Arizona. According to Numbeo, the average cost of a meal at an inexpensive restaurant in California is around $15, while in Arizona it’s around $12. Similarly, the cost of a mid-range restaurant meal in California is around $50, while in Arizona it’s around $40.

Entertainment

The cost of entertainment and leisure activities can also vary between the two states. For example, the cost of movie tickets and theme park admission tends to be higher in California than in Arizona. However, Arizona has a higher sales tax rate on non-essential goods, which can impact the cost of activities such as shopping and dining out.

When it comes to affordability, Arizona generally has more affordable housing options than California. However, this can depend on individual circumstances, such as income levels and job markets. In California, high housing costs can make it more difficult for individuals and families to make ends meet, while Arizona’s more affordable housing options can make it a more attractive destination for those looking for lower cost of living.

market trends in arizona and california

Finally, it’s important to consider housing market trends when comparing the housing cost of living in Arizona and California. Both states have experienced growth in recent years, but California’s higher demand and limited supply have led to significant increases in home values and rent prices.

Arizona has also experienced growth, but it’s more affordable housing options and diverse job market have made it an attractive destination for many Californians.

california market trends housing cost of living icon

Housing in California is notoriously expensive, particularly in major cities such as San Francisco, Los Angeles, and San Diego. In these cities, it can be difficult to find affordable housing options even for those with higher incomes. The median home value in California in 2021 is over $800,000, which is more than double the national median home value. In contrast, the median home value in Arizona is around $330,000.

One of the main factors driving the high cost of housing in California is the state’s strong economy and job market, particularly in the tech industry. This has led to a high demand for housing in urban areas, which has outstripped supply and driven up prices.

arizona market trends housing cost of living icon

In Arizona, the housing market is generally more affordable, particularly in cities such as Phoenix and Tucson. However, the cost of housing in certain desirable neighborhoods can still be relatively high, particularly in areas with good schools or easy access to amenities. Property taxes in Arizona are based on the full cash value of the property and can vary by location. In general, property taxes tend to be higher in California than in Arizona.

Overall, the cost of housing in Arizona is generally lower than in California, particularly in major urban areas. However, it’s important to do some research on individual neighborhoods and cities to get a more accurate picture of the cost of living and housing costs in each location without considering individual factors such as location, lifestyle, and personal preferences

In conclusion, the cost of living in Arizona is generally lower than in California, particularly when it comes to housing. The median home value and rent prices in Arizona are significantly lower than in California, and the home ownership rate is slightly higher. Additionally, housing affordability is generally better in Arizona, with lower hourly wages required to afford fair market rent. The numerical facts and data provide a clear comparison between the housing cost of living in Arizona vs California, and support the trend of Californians moving to Arizona in search of more affordable housing.

Additional Resources Related to “Arizona vs California: A Housing Cost of Living Comparison”

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Troy Elston is licensed Realtor in Phoenix Arizona. With over 20 years experience in real estate sales, Troy offers the highest degree of experience, service and integrity in the industry.
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