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

California has long been one of the most popular states to live in, but many California residents consider a move up the coastline to Washington state. Although California has a favorable climate, weather, recreation, and jobs, the state’s taxes, housing costs, and cost of living are pretty steep. For this reason, Washington state is often highly desired for its lower taxes, expanding job market, and more affordable housing costs. However, how do these two states specifically compare when it comes to cost of living?

The cost of living index in Washington is 118.7, meaning it is nearly 19% more expensive to live in Washington than the national average (100). California, on the other hand, has a cost of living index of 149.9, so it is quite a bit more expensive than both Washington and the national average. Washington’s median home price is $504,200, which is about 73% higher than the national average of $291,700. Meanwhile, the median home price in California is $684,800 – about 36% more than Washington.

Aside from median housing prices, let’s take a look at how the cost of living compares in Washington vs. California.

With a median home price of around $504,000, it is more affordable to purchase a home in Washington state than California. In California, the median home price is nearly 700,000. However, buying a home in both states will cost you well above the national average.

As a result of the COVID-19 pandemic allowing more people to work from home, Washington residents started to move away from the metro areas. This is still the case in 2021, with many people packing up and buying homes outside of Seattle because of their desire for more affordability. In Washington state, it is currently a seller’s market and most are purchasing homes in rural communities such as Gold Bar, Snohomish, Sultan, and Carnation.

However, housing prices are rising in these rural locations – Snohomish saw an increase of 10% while Carnation experienced an increase of 15% in median home prices. Although prices are still rising in small cities, you still get more bang for your buck than buying in Seattle and other metro areas in Washington state. Some people are also leaving Washington, but others are arriving here from places like Los Angeles for jobs in Seattle.

In May of 2021, the median home price in California hit an all-time high. California continues to be in an affordable housing crisis and, like Washington state, many are leaving metro areas in search of cheaper homes in rural locations throughout the state.

Overall, more affordable housing can be considered a major benefit of living in Washington state over California. Of course, homes are more expensive in Seattle, but if you choose to move to cities like Auburn, Richland, or Olympia the median home cost is actually less than the national average. The median home price in Seattle is $851,400, which is relatively on par with the median home price in Los Angeles – at $883,400.

While home prices in Washington state may be higher than many other states in the U.S., they are between 35 and 40 percent cheaper than California.

Between 2019 and 2020, average rent increased in 39 states across the U.S., and Washington state was among them. In fact, Washington comes in eighth on the list of the states with the highest average rental prices in the country. The state’s average rent is approximately $1,258, but the rent you will pay depends on specifically where you settle in Washington.

With that said, refer to the following table for the average rent in some of the major cities across Washington state:

Like Washington state, rental prices in California depend on the specific city you live in. Though, California comes in second on the list of the states with the highest rental prices in the nation, behind Hawaii. It’s also important to note that some cities in California – San Francisco included – have some of the highest reported rents in the country.

The following table outlines a more comprehensive look at the average rental prices in some of the major cities across California:

Taxpayers in Washington enjoy one of the most tax-friendly situations, as there are no income taxes in the state. Whether you’re a teacher, doctor, or real estate agent, you don’t have to pay an income tax on your earnings in Washington state. Although the idea to authorize an income tax in Washington has been floated around and presented on the ballot, none of the proposed measures has passed.

California, on the other hand, has a progressive income tax. This means that the income tax you pay is based on how much you earn – lower earners pay lower taxes and higher earners pay higher taxes. The state has ten income brackets in total, starting at 1% and going all the way up to 13.3%. This top marginal rate in California is the highest in the country.

While there is no state income tax in Washington state, there are high sales taxes. The base tax rate in Washington is 6.5%, but with the additional city and county sales taxes rates are usually at least 8%. In some cases, the sales tax is higher than 10%.

The sales tax in California works similarly to California, except for the fact that they have the highest base sales tax in the nation, at 7.25%. Only a quarter of the cities in California have this sales tax rate, as the extra city and county sales taxes contribute to higher overall tax rates. For example, Los Angeles County’s sales tax is 9.5% but Culver City alone has a sales tax rate of 10.25%.

Washington’s effective property tax rates – meaning property taxes as a percentage of total home value – typically sit around 1%. At the county level, effective rates range from as low as 0.61% in San Juan County to as high as 1.19% in Pierce County. Since home values in Washington are high, this equites to a statewide effective property tax rate of only 0.93%.

California, on the other hand, has a maximum allowable property tax rate of 1% of the home’s assessed value. The state’s average effective rate is just 0.73%, which is quite a bit lower than the national average of 1. 07%.

Whether you choose to live in Washington state or California, transportation costs are another important factor to consider when calculating cost of living. Transportation costs include expenses such as bus fares, transit passes, gas prices, vehicle purchase prices, and additional public transportation costs. Washington state’s transportation costs are about 14% higher than the national average.

However, with California’s transportation cost index of 133.1 and Washington’s index of 113.6, these expenses are more affordable in Washington than California.

The median household income in Washington state is $66,174, which is around 15% higher than the national median income of $57,652. When compare to California, however, California residents earn only about 1.5% more than Washington residents – with a California’s median household income of 67,169.

However, the two states have very different unemployment rates. California’s unemployment rate of 8.2% is quite a bit higher than Washington’s unemployment rate of 6.1%. Additionally, Washington’s unemployment rate is only about 0.1% higher than the national average of 6.0%.

When you consider cost of living index, both Washington and California are more expensive than the national average. However, when you compare these two states together, it is about 26% more expensive to live in California than Washington state. The cost savings in Washington is primarily contributed to more affordable housing, healthcare, utilities, and transportation costs.

Again, this depends on where you live in each state. For example, the cost of living in Seattle is almost 50% higher than the national average and the cost of living in Los Angeles is over 70% higher. However, if you choose to live in more rural locations in either state, you’ll enjoy a more affordable cost of living.