California is home to some of the country’s most popular destinations, commercial hubs, universities, and job opportunities – and its cost of living reflects it.
But just how bad is it?
Whether you’re a landlord looking to maximize your rental income or a renter who’s weighing the viability of renting in California, these statistics will give you some valuable insight into the California rental market.
1. The median rent in California is $2,800, which is $750 more than the national median (Source: Zillow)
California’s $2,800 median rent is certainly steep, sitting $750 above the national average—but this high figure is largely influenced by the rental costs in major cities like Los Angeles, San Francisco, and San Diego. These high-demand urban areas skew the state’s overall rent, making it seem like every corner of California is pricey.
Outside these metropolitan hotspots, however, renters can still find more reasonably priced options like Ivanhoe (more on that later), providing some balance in the market.
2. As of November 2024, the average rent for a one-bedroom apartment in California is $2,151, while a two-bedroom averages $2,567 (Source: Apartments.com)
While one-bedroom rental in California can be difficult to afford alone, two-bedroom apartments give renters the chance to save significantly by splitting rent.
Renters can live with a partner, roommate, family member, or anyone else who can chip in to make California living more affordable. It’s only 20% more to double the living capacity, making two-bedroom rentals a much better value for renters (if they can stand their roommate).
For property owners, a one-bedroom rental may take longer to lease because it’s harder to afford the rent alone, but it’s generally a better return over time.
3. California is ranked as the 4th most expensive rent in the country (Source: Apartments.com)
California has a reputation for being expensive – and it’s well-earned. It’s home to Silicon Valley, Hollywood, and some of the highest cost-of-living areas in the country outside of New York and other tropical destinations like Hawaii and Florida.
Renters often feel the impact of high rent and living expenses, making urban areas of CA an expensive destination for anyone who doesn’t work in the tech or entertainment industry. These living expenses may also lead to shorter leases and less consistency in rental income, so property owners should be careful about their tenant screening.
4. Ivanhoe, CA has the lowest rental prices in the state with an average rent of $378/month (Source: Apartments.com)
Renters looking for a budget-friendly California zip code to live in can look towards Ivanhoe, which offers far more reasonable rental rates. It’s centrally located between Los Angeles and San Francisco, both far enough to keep rates lower and close enough to make going into either city a day trip.
Property owners in Ivanhoe may not see sky-high rents, but they benefit from a market where tenants are less likely to move away for cheaper options. Plus, with lower home prices, it’s easier to start with an investment property.
5. Irvine, CA has the most expensive rental prices in California, with a median rent of $3,781
On the other side of Ivanhoe is Irvine, which is surprisingly the most expensive place to rent in California – even over San Francisco and Los Angeles.
Irvine rents are sky-high because of a lack of high-quality properties that fit the high-earning lifestyles of those who live in the area. It’s located close to major employers like Blizzard Entertainment with above-average salaries and near major schools like UC Irvine, increasing demand and the budgets of renters.
Irvine property owners can expect exceptional rental income and high demand for their properties, making it a great area for a cost-effective investment.
6. San Francisco and Los Angeles follow with a median rent of $3,417 and $3,285, respectively. (Source: Redfin)
San Francisco and Los Angeles aren’t far behind Irvine, boasting median rents of $3,417 and $3,285. They’re home to many high-earning individuals involved in the tech and entertainment industries (and people who are trying to be a part of each industry) and have rich cultures that are unique to each area.
However, San Francisco and Los Angeles likely land behind Irvine in rent due to the general lifestyle fitting renters who are single or early in their career looking to be at the center of professional opportunity. Meanwhile, Irvine hosts high-quality schools, contains more suburban areas, and overall fits the family lifestyle better, which requires larger homes and comes with higher rents.
Property owners may find that their tenancies are shorter and less reliable in SF or LA compared to Irvine, but their demand will remain high as long as they remain cultural hotspots.
7. Approximately 48% of rental prices in Los Angeles exceed $2,000 per month (Source: Apartments.com)
For many people, Los Angeles is the pinnacle of California living. Offering exceptional opportunity, star power, and an exciting culture, it’s a place where many aspiring artists and actors flock to, increasing the area’s demand.
As a result, almost half of LA’s rentals exceed $2,000. It’s a difficult area to rent without roommates or a significant income, with most property owners expecting incomes exceeding $6,000 per month for the household.
8. The average rent in Sherman Oaks is $5,259
Sherman Oaks is the most expensive area to live in California, on average, at $5,259 per month. It primarily comes down to location, sitting close to the famous Ventura Boulevard, which is the hub for entertainment, tech, dining, and fashion opportunities and experiences. It’s also seen as very health-focused, green, and community-driven, attracting people with high-demand lifestyles who need relaxation and recreation nearby.
Renters generally struggle to live in Sherman Oaks without a significant income of over $150,000 per year, but for those who can afford it, it’s a great living situation.
Property owners can enjoy high rental rates, including those far above the average rent, depending on what the property offers. With high demand and low supply, some high-earning tenants may even pay higher rates if they like something unique in the property or just want to be part of the community. In most cases, these renters aren’t pinching pennies – they’ll pay for what they want.
9. To maintain housing costs at or below 30% of your gross income—a common affordability guideline—you would need a monthly income of about $7,187, equating to an annual income of approximately $86,244 (Source: Apartments.com)
Renting in most areas of California is difficult for anyone to do alone. With experts recommending renters make 3-4x their rent in monthly income, it takes an income between $75,000 and $100,000 per year to afford an average one-bedroom or two-bedroom rental comfortably – and even more in the expensive areas.
Renters can help meet these income guidelines by finding larger properties that charge less per bedroom and finding roommates to split costs for affordability. Unless necessary for commuting, it’s also better to stay further away from the social hubs of the state where prices decrease, like Ivanhoe.
California landlords may have a harder time finding highly qualified tenants, especially renters moving from less expensive areas without a salary reflecting California’s cost of living, but may benefit from longer lease terms and fewer issues during tenancy.
10. 45% of California residents are renters
With nearly half of Californians renting, it’s clear that the high cost of buying property keeps homeownership out of reach for many. California’s sky-high property prices—often double the national median—mean that many residents simply can’t afford to buy, making renting the only feasible option.
For property owners, this means high demand, while renters face limited affordable pathways to ownership in such an expensive real estate market.
11. The median home price in California is around $700,000, significantly higher than the national median of approximately $400,000 (Source: Car.org)
With home prices averaging around $700,000, California’s real estate market feels out of reach for many aspiring homeowners. This high barrier to entry pushes more people into the rental market, a trend that property owners can appreciate as they face strong rental demand. But for renters hoping to buy, it can feel like a distant dream.
12. In 2023, approximately 120,000 new housing units were authorized by building permits, reflecting ongoing efforts to address the housing shortage (Source: Car.org)
With so many desirable areas in California, increasing the supply of properties available is essential for meeting its demand and keeping prices reasonable. With 120,000 new housing units authorized in the last year or two, there will likely be more rentals to help keep up with new Californians.
For renters, this means more options to choose from and potentially lower rates. For property owners, it means more competition and could lead to lower rental rates. However, these new properties will take time to build.
13. As of November 2024, the following towns in California are recognized for having the highest median home prices: Atherton: Median home price of $7,587,820, Los Altos Hills: Median home price of $5,683,937, and Hidden Hills: Median home price of $5,131,347 (Source: Stacker.com)
Atherton, Los Altos Hills, and Hidden Hills top California’s luxury housing charts, with home prices in the millions. These areas are desirable for their locations and have local zoning laws that increase property and home sizes, adding to the minimum price a home can fetch.
Renters here often face luxury rental rates, while property owners cater to high-income tenants in areas where the housing market is not for the faint-hearted.
At this price range, homebuilders, property owners, and renters usually pay less attention to pricing and care more about what each home has to offer, leading to exceptional rents and home prices.
14. Bakersfield has seen an average rent increase of $500 since the COVID-19 Pandemic (Source: NBC Los Angeles)
The COVID-19 Pandemic drastically impacted so many parts of society, including how people attended school, worked, and traveled. With an increase in remote work, there’s been a trend of people moving more inland from major cities in California to escape higher costs of living. As a result, previously affordable areas like Bakersfield have seen sharp rent.
For renters, inland rent increases mean living further away from the coast and most major cities without significant savings, unless they stay significantly far away.
Property owners outside of key coastal and major cities can benefit from the spreading of Californians throughout the state as demand increases, raising rents.
15. A substantial number of renters are leaving Los Angeles, with 67.8% of those searching for new residences considering other metropolitan areas and 32.2% looking at non-metropolitan regions (Source: smdp.com)
High rents and cost of living are motivating many Los Angeles renters to search elsewhere, with 67.8% considering moves to other cities and 32.2% looking beyond city life altogether. It’s clear that the rental rates aren’t sustainable for a large portion of potential renters, signaling that property owners in LA may experience reduced rental rates soon and renters who need to be in LA seeing more favorable rents.
Wrapping Up
California’s rental landscape reflects a state where high demand meets even higher prices, shaped by diverse needs from young professionals in bustling cities to families seeking top-tier suburban living. The combination of a limited housing supply, steep property costs, and a large renter population continues to push rental rates upward.
While some locations like Ivanhoe remain affordable, others like Sherman Oaks are likely off-limits to the majority of renters – though property owners in these areas aren’t complaining.
If you’re a renter, carefully weigh the income, job prospects, education, and potential quality of life you can afford in California before committing to a state with a high cost of living.
Investors and property owners, be prepared to pay a lot more than most other states for any new investments. You should also carefully screen your tenants to minimize the risks of costly evictions and other issues that significantly hurt your bottom line and income.
Fortunately, you can work with a trusted property management company like RentalHouse to protect your home, maintain consistent income, and reduce the headaches of owning a rental property. With a variety of different packages and plans built to meet your needs, our services and experience help you navigate the complex California rental market and maximize your investment.
Reach out today for a consultation.