What Is The Cost Of Living In Oregon Vs. California?

California remains a dream location to live for millions around the world. However, Oregon state is often desired for its calmer, more laid-back, and more affordable lifestyle. Both states are located on the west coast and have much to offer potential residents, but how do they stack up in terms of cost of living?

The cost of living index in Oregon is 113.1, meaning it’s about 13% more expensive to live in Oregon than the national average (100). California, on the other hand, has a cost of living index of 149.9, so it’s substantially more expensive than Oregon but both states are still above the national average. The median price of a home in Oregon is $438,100, which is about 50% higher than the national average of $291,700. Meanwhile, the median home price in California is $684,800 – about 56% more than Oregon.

Aside from median housing prices, let’s examine how the cost of living compares in Oregon vs. California.

When you consider the fact that the median home price in Oregon is approximately 440,000, it is much more affordable to buy a home here than in California. By contrast, the median home price in California is nearly 700,000, which is over 50% higher than Oregon.

In recent years, we saw record-low interest rates on home loans, increased demand from buyers, and a housing shortage, which resulted in a record rise in home prices. Not to mention, the reluctance of potential sellers to put their homes up on the market during a pandemic has largely contributed to the lower supply of houses. For the few homes that are available, both Oregon and California are experiencing competitive bidding.

In May, the median home price in California hit an all-time high and the affordable housing crisis has persisted. For this reason, residents in the state continue to leave urban areas in search of cheaper housing in the more rural locations in California. Although bidding wars aren’t as extreme as they once were, homes in California are still getting multiple bids.

Oregon has long been one of the fastest-growing states in the nation, driven by transplants settling here from other states. However, over the last couple years, the state has begun seeing much slower growth. A slower population growth may actually help relieve some upward pressure, what with Oregon’s land use and tenant laws limiting housing supply and the sluggish residential construction causing housing prices to rise. While housing prices in Oregon may be quite a bit higher than other states, it is still between 35 and 40 percent cheaper than buying a home in California.

The average rent in Oregon cities is generally lower than the national average. Though, Oregon comes in fifteenth on the list of the states with the highest average rental prices in the country. The state’s national average rent is $1,110, but prices can vary considerably based on where you live in Oregon. Apartments in Lake Oswego, OR are the most expensive in the state, renting for approximately $1,689. Whereas, Keizer, OR apartments are the cheapest, at $1,059 on average.

With that said, the following table outlines the average rent for some of the various cities in the state of Oregon:

Grocery and food index is another factor that can impact the cost of living in a particular city or state. If you lived in Oregon instead of California, you’re looking at around a 9.4% savings on groceries.

The grocery cost index in California is just marginally higher than the national average of 100, coming in at approximately 105.1. Whereas, Oregon’s grocery index is pretty on par with the national average at 100.4. Examine the following table for a more comprehensive look at the average prices on groceries in Oregon vs. California:

Oregon was one of the first states on the western side of the United States to adopt a state income tax. It has a progressive income tax that features four income tax brackets in total, with rates ranging from 4.85% to 9.9%. Oregon’s top marginal rate (9.9%) is one of the highest in the nation, but only a select few taxpayers actually pay this rate. It only applies to single filers that make at least $125,000, or $250,000 for joint filers.

Like Oregon, California also has a progressive income tax. This simply means that those who earn less pay a lower tax rate and those who earn more pay a higher tax rate. California has ten total income brackets that increase from 1% to a top rate of 13.3%. The state’s top marginal rate is the highest in the nation, but only applies to taxpayers who make over $1 million of taxable income.

While most states have a sales tax in place for the purchase of goods and services, California has an entirely different method. At 7.25%, the minimum sales tax in California is one of the highest in the country. But, some California cities have even higher rates, because of the numerous additional city and county sales taxes. In fact, less than half the cities in California actually have a sales tax of 7.25%. For instance, Los Angeles County has a sales tax of 9.5%, but neighboring Culver City has a sales tax of 10.25%.

On the other hand, Oregon does not collect any sort of sales tax – neither at the state nor the local level. In fact, this can be seen as one of the major financial benefits of living in Oregon.

In Oregon, there are 1,200 local taxing districts, with property tax rates that vary between each. The tax collections are managed mainly by Oregon’s 36 counties, which evaluate property and determine the taxes owed. The average effective property tax rate in Oregon is 0.90%, the 25th highest rate in the country. Though, tax rates can vary considerably between counties. For instance, Josephine County has the lowest rate of 0.58% and Morrow County has the highest at 1.24%.

Proposition 13, passed in 1978, established California’s maximum allowable property tax rate at 1% of the home’s assessed value and also limited increases on assessed value to 2% each year, unless the home has undergone construction or changed ownership. This law has helped to keep property tax payments in California below the national average, and in some cases this is pretty noteworthy.

Median household income in Oregon is $56,119, about 14% lower than California and 3% lower than the national average. With this in mind, California residents earn significantly higher incomes than both the national average and those who reside in the state of Oregon. Though, the unemployment rate in California is quite a bit higher than Oregon.

The unemployment rate in California is 8.2% and the unemployment rate in Oregon is 6.5%. Both rates are higher than the national average of 6.0%