SAN DIEGO — It is no secret that San Diego can be pretty pricy for residents, but cost of living has catapulted the city to the top spot in a U.S. News & World Report ranking of most expensive places to live in the country.
In one of the magazine’s real estate rankings for 2023-2024, America’s Finest City was deemed the most unaffordable metro area in the country to live, earning a “value score” of 3.3 in their data analysis to help figure out the best cities to settle down.
According to the magazine, the Value Index measures how comfortably the average resident of a metro area can afford to live within their means. Specifically, it looks at housing affordability, as well as federal data on the parity between regional prices and national averages.
Home prices were one of the factors that pushed San Diego up on the ranking, given that average prices are considerably higher than the national rate.
In August, the median price for a single-family home came in right at $1 million for the first time in the region’s history — nearly $650,000 more than the national average by some estimates.
U.S. News and World Report also pointed to additional fees that San Diego residents have to pay, such as homeowners association dues or apartment complex maintenance costs, as another factor driving its unaffordability.
However, the magazine said that many residents are willing to pay elevated prices relating to cost-of-living, given other aspects of the region that make it an ideal place to live.
They added that some San Diegans often refer “to the cost-of-living differences as the ‘sunshine tax,’ or price of enjoying a year-round temperate climate.”
Many of the other metro areas that were placed along the top 10 have similar “sunny” reputations with their climate, including cities Los Angeles, Honolulu, Miami and Santa Barbara.
Los Angeles, which came in second place on the ranking, was also given a score of 3.3 for residents’ ability to afford living there. Although, San Diego’s northern neighbor comparatively had lower scores for other metrics used by the magazine to look at “best places to live,” including the overall and quality of life indexes.
A full list of the top 25 “most expensive places to live” in the U.S. can be found here.
This ranking comes as inflation rate nationwide remains to a persistent problem for federal officials, but San Diegans seem to have been feeling it even more.
In San Diego, the U.S. Bureau of Labor Statistics estimated that the city exceeded the year-to-year national rate of inflation, which was around 3.7% in September. Over the last 12 months, prices in the San Diego area advanced about 4.7% overall, according to the bureau.
Housing costs have been one of the most pressing issues facing elected officials, with prices skyrocketing for both buyers and renters due to a continued lack of available units to meet the demand in the region.
According to BLS, rent has risen in the region about 8.8% between September 2022 and September 2023. Meanwhile, the average price for a single-family home has risen about 10.1% during that time, according to data from the Greater San Diego Association of Realtors.
Electricity costs have also had a massive increase over the last year, jumping about as 16.2%, according to BLS. Other increases reported by the bureau in key areas include:
- Dining out: 5.8%
- Gasoline: 5%
- Medical care: 2.5%
- Alcoholic beverages: 2.1%
It’s not all bad news though, as a handful of other price categories have seen a decrease over the last year. According to the bureau, prices eased in areas like utility gas services (-11.4%), used vehicles (-7.7%), fruits and vegetables (-5.8%), “durable” items purchased by consumers (-3%), and products in the meat, poultry, fish and eggs food group (-2.7%).
The overall inflation rate in the region has also fallen quite a bit compared to the price differences in the past two years. In September 2022, BLS estimated the annual inflation rate was about 8.5%. The year prior, the rate was estimated to be about 6.5%.
Having more accessible affordable housing would likely bring down regional inflation even more.
According to researchers with the Consumer Financial Protection Bureau, housing is the largest component in the bundle of goods and services that is used to calculate the Consumer Price Index (CPI), which is the basis for inflation measurements.
When housing costs go down, the CPI also tends to fall — a trend that experts say was most recently seen during the Great Recession.