San Diego is located in southern California, along the coast of the Pacific Ocean.
It is known for its sunshine, world-class attractions, and almost perfect weather year-round.
Visitors and residents alike will say that the city is expensive.
What makes it so expensive in comparison to other cities around the United States?
There are 10 reasons outlined to help explain why the costs are as high as they are.
Why Is San Diego So Expensive?
San Diego is expensive because it is a tourist destination.
Many people want to live there, and when there is demand, the prices can skyrocket.
By understanding more about the city, you can start to see why it’s so pricy in so many aspects of life.
San Diego continuously tops charts as one of the top 10 to 12 most expensive cities to live in across the United States.
1. Real Estate Costs are High
Real estate in San Diego is high because so many people want to live in the area.
Many people flock to California because of the weather, the schools, and the beaches.
Then, they choose to stay because that’s where they get jobs and raise families.
The median home cost in the U.S. is only $231,000.
However, in San Diego, the cost is almost triple that.
The median home cost is $645,000.
As for what you’ll get for that much money, it’s going to be older and smaller than what you might expect.
This means that those with enough money will actually be spending quite a bit more.
It’s not uncommon to see homes that are under 2,000 square feet selling for $1 million or more.
The closer you get to the beach, the more you’re likely to spend.
Condos on the beach that are less than 1,000 square feet may sell for well over $1 million and cost you hundreds of dollars a month in condo association fees.
Rent can be just as high.
Many people struggle to make ends meet when they can’t buy a home.
They end up renting a one-bedroom apartment for $1,600 a month.
Some will find that they have to have multiple roommates to afford a one or two-bedroom apartment because of the high rent costs.
When you look at the cost of real estate, it’s not surprising to see that renters make up approximately half of the San Diego population.
They simply cannot afford to buy in today’s market.
2. Sales Tax is High
The sales tax in San Diego is high, making the cost of many items purchased a lot higher than elsewhere in the U.S.
Currently, the sales tax rate for the county is 7.75%.
This is a combination of state, county, and city sales tax rates.
The sales tax in California is 6%.
The county adds on another 0.25% and the city adds in another 1.5%.
Of course, all it takes is a quick vote on election day for the sales tax to rise even higher.
This is particularly a sticker shock for those who come from states where there is no sales tax such as Delaware, New Hampshire, Montana, and Oregon.
California does have the highest sales tax of all the states in the United States.
This is often why many people choose to do their shopping online as well as to buy various items while they’re on vacation in another state.
3. Everything’s Always Being Improved
There is a Capital Improvements Program within the city that is constantly creating new projects.
Since everything is always being improved, there’s always an expense for those projects.
It can lead to high costs around the city so that the government has a way to pay for everything.
The projects cover a variety of things: street improvements, utility undergrounding, and even sewer and water main replacements.
The city has so many projects going on that they have a project data website that allows residents to search what’s going on.
It allows people to learn about the project, the phase of construction that it is in, and the estimated date that it will be completed.
While the city of San Diego offers companies an opportunity to bid on projects, they do not always go to the lowest bidder.
There are ways for companies to register as a vendor, either as a manufacturer, distributor, supplier, or contractor.
The reason the projects don’t always go to the lowest bidder is to ensure that the city is being diverse.
Some projects will go specifically to companies that are identified as small, women-owned, or minority-owned businesses.
4. Cost of Living is High
The cost of living is high in comparison to other cities in California as well as the U.S. as a whole.
On an index of 100 where 100 represents the average in the U.S., San Diego sits at an overall cost of living of 160.1.
To provide some reference, California is at 149.9.
This means that it’s extremely expensive to live in the city as opposed to other parts of the country.
The cost of living is not only expensive because of housing but because of the cost of groceries, utilities, transportation, and more.
Within the San Diego area, there are even more expensive areas.
Poway and Encinitas, for example, are suburbs of San Diego where costs are even higher.
People will often pay more in San Diego when they go out to eat at a restaurant because of the premium ingredients as well as because of the demand.
Even clothing, repairs, and other services are more expensive because of the demand.
Businesses know that they can charge more simply because of the higher cost of living associated with being in San Diego.
5. It’s a Highly Sought-After Destination
San Diego is known as California’s Beach City.
It’s a highly desirable location because there are plenty of things to do.
Beyond the 70 miles of coastline along the Pacific Ocean, there is also a vibrant nightlife as well as plenty of cultural attractions.
Balboa Park, for example, is identified as the “Smithsonian of the West” because of the art and culture that is offered.
There are more than a dozen museums, multiple art galleries, several performing arts venues, and of course, the world-renowned San Diego Zoo.
San Diego can be a very family-friendly destination.
Plenty of hotels are scattered about the city, making it easy for families to choose where they want to stay.
Then, there are plenty of attractions, including Legoland California and the San Diego Zoo Safari Park.
Other attractions that bring people in include Aquatica, Sea World, and the USS Midway Museum.
With so many attractions that are unique to San Diego, people come in from all over the world.
It’s a sought-after destination, so the city knows that people will pay.
They thrive on tourism, and they don’t apologize for the high prices that are charged around every turn.
For those who want to be budget-friendly, they can choose free attractions on the beach: bonfires, building sandcastles, and enjoying the waves.
Even then, there is the cost of accommodations.
Hotels along the beach and throughout Mission Bay will commonly go for $300 or more a night.
Some may cost much more, particularly as you get into the rooms that are large enough for a family of four.
If there are more features on the property, it’s going to be more expensive because it offers convenience.
Much of the attractions are priced based on supply and demand.
The demand is high, which reduces the supply.
As a result, the costs skyrocket because they can.
It leads to high-priced hotels and expensive attractions because those businesses know that there are always plenty of tourists who will be willing to pay the price.
6. Many Rich People Live in the City
A number of celebrities and other ultra-rich live in San Diego.
This helps to keep the cost up because people are willing to pay the higher taxes.
Additionally, as more celebrities move in, there’s the feeling of exclusivity.
People will pay more to get into the communities where high-fame people live.
Some of the celebrities that call San Diego their home include Eddie Vedder, Nick Cannon, Pauly Shore, Alicia Keys, Shaun White, Bill Gates, and more.
As more celebrities move in, there will also be the desire to enjoy more privacy.
This can lead to building more gated communities.
Some celebrities are also focused on helping the communities they live in.
They’ll donate to the individual communities as well as to nonprofits so that various things get fixed and added.
As more amenities become available, it leads to the city being even more expensive.
7. Utilities Are High
The cost of utilities is high for residents and business owners in San Diego.
On average, people in San Diego will pay approximately 8% more in utilities than elsewhere in the U.S.
Most people will pay both a water bill and an electric bill.
Then, of course, there’s cable/internet for those who want to have those available, too.
Electric bills can be higher for those in San Diego.
Much of this has to do with the higher kilowatt-hours used to compensate for the higher temperatures.
Those in older homes often spend even more because the homes aren’t energy efficient.
Therefore, it might be more expensive to buy a newer home, but it can be a worthy investment to gain more energy efficiency.
As for water, many residents will pay approximately $80 per month.
This is approximately twice as much as the average home in the U.S.
Additionally, for those who are used to well water, it can come as quite the shock that there’s any cost for water.
The city’s water is also highly purified, so it’s not going to be hard water.
This can reduce the need for bottled water or even a water purification system.
However, because the city’s water plants are doing the purification for the residents, it adds to the overall utility costs.
8. Public Transportation Is Abundant
The city spends a significant amount of money on public transportation.
It offers convenience for people to get to where they need to go without the need for a car.
Considering that southern California is known for bad traffic and high commutes, the public transportation was made available to help offset the problem.
Many in San Diego look at public transportation as a way to save money.
It can be easier than having to navigate traffic and add to hour-long commutes.
It can also save when looking at the cost of owning a car and paying for auto insurance.
The problem is that when there are so many people dependent on public transportation, the city has to offer options.
The options encompass various areas of the city, including suburbs and the downtown area.
Some of the modes of transportation available include the following:
- Waterfront shuttles
Depending on where you want to go, the cost can vary from a few dollars for a day’s travel to a few hundred dollars for a monthly pass.
In some instances, public transportation will take you as far as Santa Barbara and all the way up the northern Pacific coast.
A significant amount of legislation has been in the works to add to the overall public transportation offered in San Diego and throughout the state.
Should the politicians get their way, more public transportation will be created, including the possibility of light rails.
When this happens, taxes in the area are likely to go up as a way to pay for the installation and maintenance of it all.
9. Groceries Are High
Buying groceries can be expensive in San Diego.
There are quite a few high-end markets, which allow residents to find premium ingredients.
There are also butcher shops and other specialty stores.
Depending on the neighborhood, many people will only have access to the high-end markets.
For convenience, they’ll do the majority of their shopping at the more expensive stores.
Farmers’ markets are abundant throughout San Diego, too.
Much of this has to do with the moderate weather found throughout the year.
People enjoy buying fresh ingredients that were produced locally.
While there is an emphasis on shopping local, it can also be more expensive.
This is because all of the local farmers have to endure the same high costs like everyone else, and those costs are passed down directly to the consumer in order to make a profit.
While other parts of the country have access to “discount” grocery stores such as Walmart and H-E-B, stores like this in San Diego are few and far between.
It means that people are forced to buy all of their food and non-food items at the specialty stores.
Additionally, for those who don’t want to buy premium ingredients, it leads to many people eating out or buying ready-made foods.
This can add up quickly, costing people more money on their grocery bills than if they lived elsewhere in the country.
If you live in San Diego, most of your shopping would likely be done at places like Gelson’s or Bristol Farms—both identified as “gourmet” with a wide range of organic and imported items.
10. The Weather Is Highly Desirable
Some people refer to the high cost of living as the “sunshine tax.”
Essentially, there are plenty of people who live in San Diego because of the weather, and they’ll happily pay the higher prices everywhere because they want to continue to enjoy the weather.
People feel that it beats having to deal with rain, snow, and the dreariness found in other cities.
The weather is temperate throughout the year.
While June through August results in the hottest weather, it is still around 80 degrees at its hottest.
December through February are the coolest months, with the temperatures rarely dipping below 50 degrees.
With such moderate weather, it’s a highly desirable place for people to visit at any time of the year.
People can enjoy all of the outdoor activities that the city has to offer.
Further, there’s no snow.
Many people will choose to visit San Diego in the winter to escape the snow and cold weather that is found elsewhere.
Many will also move away from the colder temperatures, which increases the overall demand within the city.
Even rain is at a minimum in San Diego.
From May through September, it’s rare to see even a single day of rain.
December through March is considered the “rainy” season, and even then, it averages to four days of rain per month.
A Quick Peek at the Politics of San Diego
The politics in San Diego definitely has an impact on the cost of living.
The city is run by a Democratic mayor by the name of Todd Gloria.
The state itself is also run by a Democrat.
As a whole, San Diego tends to be consistently more Democratic than the state as a whole.
In fact, they have voted for Democratic presidential candidates in the past seven elections.
The city has prioritized immigration, which means that they are willing to work with immigrants to help them settle into the city.
They offer a variety of initiatives that will allow immigrants to find work, go to school, and become citizens.
Some initiatives and grants are also offered to help immigrants open businesses.
This can be a drain on the city’s finances, which means that the cost of living is higher to pay for such things.
The City Council for San Diego also has a variety of boards and commissions that dictate how money is spent and what issues are prioritized.
There are dozens of boards and commissions, including such ones as Old Town San Diego, Municipal Golf, Wetlands Advisory, Youth, Senior Affairs, and more.
With so many areas that are divided out to concentrate on, it ensures that the public interests of so many are taken into consideration.
While it’s great for a city to focus on so many groups, it comes at a cost.
The city has a large budget because of the boards and commissions, and the budget is funded by the taxpayers throughout San Diego.
Ways to Save Money in San Diego
Those who live in San Diego embrace the high costs as a part of being able to enjoy all that the area has to offer year-round.
While many struggle to make ends meet, others have no problem doing so.
If you choose to call San Diego home, you can save money by shopping around for real estate.
You may be able to find a fixer-upper or you may want to consider renting out a room or two.
If you plan on visiting San Diego, you can save money in a few ways.
Instead of staying at one of the prime hotels, look into an Airbnb where you can rent a room or an apartment for a few days.
It can end up saving you hundreds of dollars, even if you plan on visiting for only a week.
Various coupon books and discount websites can save you money on attractions.
Don’t hesitate to cut coupons if it means you can save money on restaurants, beach rentals, or anything else that you want to do.
Plenty of people choose to use coupons, and the various businesses would prefer that you use a coupon than avoid them altogether.
You’ll also want to consider looking at different times of the year to visit.
June and July are the hottest months of the year.
As such, it also means that tourists are less likely to visit.
Hotels and other venues may offer specials to draw in as many people as possible.