California's cost of living surpasses the national average by 42%, with significant expenses in areas such as car insurance, housing, and utilities. Recent analyses point to the proliferation of tort lawsuits in the state as a contributing factor to this high cost of living.
RentCafe, a service providing real estate market information, has reported that housing in California is 101% more expensive than the national average. According to their data, Californians are also spending more than the average American on utilities (+22%), food (+17%), and transportation (+27%). Non-essential services, such as grooming and entertainment, are approximately 10% more expensive in California than they are nationally.
The escalating insurance costs also contribute to California's higher cost of living. The American Tort Reform Foundation (ATRF) has labelled jurisdictions in California as "judicial hellholes" for the past 15 years due to the influx of tort lawsuits filed by trial lawyers in the state. According to ATRF's report, each Californian pays an annual "tort tax" of $574 due to these lawsuits - a figure that far exceeds most other states in the U.S. Citing a 2021 study conducted by John Dunham & Associates, ATRF stated that California residents and businesses could save over $22 billion if certain tort reforms were implemented.
As proof, experts highlight the surge in legal advertisements within the state. "Lawyers know this is a Judicial Hellhole – local trial lawyer ads increased more than 115% between 2016 and 2020 while the spending on those ads increased by more than 50%," said ATRF about California. The implication is that trial lawyers are aware of their advantageous legal environment and aim to profit from the numerous suits they can file within California.
One resident expressed her concerns about what California’s high cost of living implies for her family’s future via X, formerly known as Twitter. "I have 5 kids who will most likely have to look into moving out of state when they graduate from high school because of the cost of living in California (including room & board prices for colleges/universities)," she stated in a post.
RentCafe, according to its website, offers data and reports related to the real estate market. Its information has been featured in publications including The New York Times, Forbes, and Market Watch. RentCafe also provides consumers with information about house and apartment listings.