How Coastal Californians make and spend so much



 Updated Graphic

California's Growing Income Gap: How Households Spend in the Golden State

By Financial Reporter
March 30, 2025

New data reveals that California's major metropolitan areas continue to outpace the nation in household income, but residents are feeling the squeeze from escalating housing costs that consume an ever-larger portion of their earnings.

According to the latest figures from the U.S. Bureau of Labor Statistics and other sources, the income gap between California's wealthy coastal regions and the rest of the country has widened since 2022, particularly in the Bay Area where median household incomes now reach a staggering $186,600 in San Francisco and San Mateo counties.

"The numbers tell a story of prosperity alongside growing financial strain," says economic analyst Maria Chen. "Californians earn more, but much of that advantage disappears into housing costs."

San Diego has seen household incomes climb to an average of $139,707, up from $122,832 in 2022-23, representing a 13.7% increase in just two years. Meanwhile, Los Angeles incomes have remained relatively stagnant, with median four-person household income unchanged at $98,200 from 2023 to 2024.

How Californians Spend Their Money

The Bureau of Labor Statistics confirms that household expenditures remain significantly higher in California metros compared to the national average:

  • Bay Area: $110,886 annually
  • San Diego: $91,204 annually
  • Los Angeles: $86,077 annually
  • National average: $75,172 annually

Housing continues to dominate California budgets, accounting for 37-38% of household expenditures across the state's major metros compared to just 33% nationally. A recent Redfin study found homebuyers in five California cities must allocate at least 67% of their income toward housing costs to afford a median-priced home—the highest proportion in the nation.

The housing burden has grown even more severe since 2022. According to the California Legislative Analyst's Office, annual household income needed to qualify for a mortgage on a mid-tier California home reached approximately $231,000 in late 2024—more than double the state's median household income of $96,500.

Regional Spending Differences Persist

Beyond housing, distinct regional differences in spending habits continue to define California's metropolitan areas:

Los Angeles residents remain the state's dining-out champions, allocating 48% of their food budget to restaurants and takeout, compared to 44% in the Bay Area and 39% in San Diego. This pattern likely reflects the region's high percentage of dual-income households (approximately 50%) and larger average household size (2.7 people).

Transportation costs still vary significantly, with Bay Area residents spending just 14% of their budget on getting around, compared to 16% in Los Angeles and San Diego, and 17% nationally. Analysts attribute this to the Bay Area's more extensive public transit system and lower vehicle ownership rates (1.6 vehicles per household versus 1.8-1.9 elsewhere).

Healthcare costs remain a relative bright spot for Californians, who spend about 6% of their budgets on medical expenses compared to 8% nationally.

The Generational Housing Crisis

Housing experts warn that California's housing affordability crisis is reaching unprecedented levels. Monthly payments for a newly purchased mid-tier home in California reached nearly $5,800 in December 2024—an 84% increase since January 2020.

"What we're seeing is a fundamental shift in what it means to be middle class in California," says housing policy researcher David Wong. "The traditional pathway to homeownership is becoming mathematically impossible for many residents earning what would be considered excellent salaries elsewhere."

This affordability crisis is reshaping California's demographics. After decades of population growth, the state experienced population decline between 2020 and 2023, losing 412,000 residents. While the population stabilized with modest growth of 49,000 people (0.13%) between July 2023 and 2024, experts note that housing costs continue to drive significant migration to other states.

As California grapples with these economic realities, policymakers face mounting pressure to address the widening gap between the state's high incomes and even higher cost of living—especially as housing consumes an increasingly unsustainable portion of household budgets.

 



Graphical Breakdown

I'll summarize the information from the Union Tribune article about how households in California's three major metro areas (Bay Area, Los Angeles region, and San Diego) make and spend their money compared to the national average.

Income

California households earn significantly more than the national average:

  • Bay Area: $154,992 average annual household income
  • Los Angeles region: $124,346
  • San Diego: $122,832
  • National average: $97,911

However, there's an important difference in how these incomes are generated. The percentage of households with two earners varies considerably:

  • Los Angeles region: about 50% have two earners
  • San Diego: about 40% have two earners
  • Bay Area: about 30% have two earners
  • National average: about 30% have two earners

Expenses

Total annual household expenses also exceed the national average:

  • Bay Area: $110,886
  • San Diego: $91,204
  • Los Angeles region: $86,077
  • National average: $75,172

Housing

Housing takes a larger percentage of California budgets:

  • Bay Area and San Diego: 38% of total expenses
  • Los Angeles region: 37% of total expenses
  • National average: 33% of total expenses

Food

Food spending as a percentage of total expenses is fairly consistent:

  • Los Angeles region: 14% of total expenses
  • Bay Area, San Diego, and national average: 13% of total expenses

However, dining out habits differ significantly:

  • Los Angeles region: 48% of food costs go to dining out
  • Bay Area: 44% of food costs go to dining out
  • San Diego and national average: 39% of food costs go to dining out

This may be influenced by household size and dual-income status:

  • Los Angeles region: 2.7 people per household and many two-income households
  • San Diego: 2.5 people per household
  • Bay Area: 2.3 people per household
  • National average: 2.4 people per household

Transportation

Transportation expenses vary significantly:

  • Bay Area: 14% of consumer spending
  • Los Angeles and San Diego: 16% of consumer spending
  • National average: 17% of consumer spending

Bay Area residents spend more on public transportation (14% of their transportation budget vs. 8-10% elsewhere) and own fewer vehicles (1.6 per household vs. 1.8-1.9 elsewhere).

Healthcare

Healthcare costs are lower in California:

  • All three California regions: 6% of total spending
  • National average: 8% of total spending

Discretionary Spending

Californians spend less on entertainment:

  • San Diego: 4.2% of spending
  • Los Angeles region: 3.9% of spending
  • Bay Area: 3.4% of spending
  • National average: 4.7% of spending

Charitable giving and other "cash contributions" also show regional differences:

  • Bay Area: 3.5% of spending
  • San Diego: 2.5% of spending
  • Los Angeles region: 1.7% of spending
  • National average: 3.4% of spending

The article suggests Californians may have less discretionary income left after covering life's necessities.

Verification and Variances from Recent Data

Based on my research for the most current data, I can verify the following information about household income and spending in California's three major metro areas compared to the original article data:

Income Data Variances

  1. Bay Area (San Francisco-San Mateo Counties):

    • Original article: $154,992 average household income
    • Updated data (2024): $186,600 median household income The median income for four-person households in San Francisco and San Mateo counties has increased to $186,600, making these counties have "the highest median household income in the state."

  2. Los Angeles Region:

    • Original article: $124,346 average household income
    • Updated data (2024): No significant change found in recent sources. Los Angeles County median income remained unchanged at $98,200 for a four-person household from 2023 to 2024 In Los Angeles County, "the median was unchanged at $98,200 for a four-person household."

  3. San Diego:

    • Original article: $122,832 average household income
    • Updated data (2024-25): $139,707 average household income The "average household income in San Diego is $139,707" with a median household income of $104,321.

  4. National Average:

    • Original article: $97,911 average household income
    • Updated data (2024): $78,171 median household income In 2024, "the median annual household income is estimated to be $78,171, according to data consulting firm Motio Research."

Household Size and Two-Earner Status

There was insufficient recent data to verify changes in the percentage of two-earner households in each region. The original article reported approximately 50% of households around L.A. have two earners, 40% in San Diego, and 30% in the Bay Area and nationally.

Spending Data Verification

The Bureau of Labor Statistics (BLS) data confirms the spending figures from the original article:

  1. Bay Area: $110,886 annual household expenditures BLS reports that "households in the San Francisco-Oakland-Hayward, CA, metropolitan area spent an average of $110,886 per year in 2022–23."

  2. San Diego: $91,204 annual household expenditures BLS confirms that "households in the San Diego-Carlsbad, CA, metropolitan area spent an average of $91,204 per year in 2022–23."

  3. Los Angeles: $86,077 annual household expenditures BLS verifies that "households in the Los Angeles, CA, metropolitan area spent an average of $86,077 per year in 2022–23."

  4. National Average: $75,172 annual household expenditures (confirmed in multiple BLS sources)

Housing Expense Proportion

The high proportion of income spent on housing in California metro areas is supported by recent data:

A 2024 Redfin study shows that in five California cities, "homebuyers earning the local median income must put at least 67% of their income toward housing to afford a median-priced home — the most of anywhere in the U.S."

The housing affordability situation in California has worsened since the original article:

As of September 2024, "annual household income needed to qualify for a mortgage on a mid-tier California home was about $231,000—over 2 times the median California household income in 2023 ($96,500)."

Formal Citations

  1. California Department of Housing and Community Development. (2024, May 14). "Here are California's affordable housing income limits for 2024." Urbanize LA. https://la.urbanize.city/post/here-are-californias-affordable-housing-income-limits-2024

  2. World Population Review. (2025). "San Diego, California Population 2025." https://worldpopulationreview.com/us-cities/california/san-diego

  3. CNBC. (2024, July 11). "Here's the median salary in the 25 biggest U.S. cities—see how you compare." https://www.cnbc.com/2024/07/11/the-median-salary-for-the-25-biggest-us-citiessee-how-you-compare.html

  4. CNBC. (2025, February 9). "Typical homebuyers in Los Angeles, San Francisco and San Diego spend up to 78% of income on housing." https://www.cnbc.com/2025/02/09/us-cities-where-buying-a-home-requires-biggest-share-of-income.html

  5. Legislative Analyst's Office. (2024). "California Housing Affordability Tracker (4th Quarter 2024)." https://lao.ca.gov/LAOEconTax/Article/Detail/793

  6. U.S. Bureau of Labor Statistics. (2024). "Consumer Expenditures in the San Diego Metropolitan Area — 2022–23." https://www.bls.gov/regions/west/news-release/consumerexpenditures_sandiego.htm

  7. U.S. Bureau of Labor Statistics. (2024). "Consumer Expenditures in the Los Angeles Area — 2022-23." https://www.bls.gov/regions/west/news-release/consumerexpenditures_losangeles.htm

  8. U.S. Bureau of Labor Statistics. (2024). "Consumer Expenditures in the San Francisco Metropolitan Area — 2022–23." https://www.bls.gov/regions/west/news-release/consumerexpenditures_sanfrancisco.htm

 

How Californians spend so much more than fellow Americans – San Diego Union-Tribune

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