Why Is San Francisco So Expensive? (10 Reasons)

San Francisco skyline and Bay Bridge at sunset, California USA


San Francisco is one of the most expensive cities to live in within the United States.

According to Numbeo, a family of four will spend around $4,941 each month just to live in the city.

That number doesn’t include rent or a mortgage.

A single person will spend around $1,365 a month without rent included.

From housing prices to a large population, here are 10 reasons why San Francisco is expensive.


Why Is San Francisco So Expensive? (10 Reasons)


1. Home Prices

Panoramic view of Victorian houses view from Alamo Square, San Francisco, USA.


San Francisco is expensive because the price of housing is expensive.

The average home price in San Francisco is $1,534,709.

Even homes that are under 1,000 square feet are selling for several hundred thousand dollars.

This makes living in San Francisco expensive because it requires you to earn a certain income.

If you don’t earn that income, you’re not going to be able to afford a home.

Most banks expect you to have a 20% down payment on a house.

That’s if you even qualify for a loan in the first place.

For some houses in San Francisco, the down payment alone could easily buy you another house in a cheaper city.

Since you’re borrowing a lot of money from the bank, it also means that you have to pay that back with interest.

If you have a high-interest rate, it makes your monthly mortgage payments even more expensive.

Your mortgage payments, alone, are already expensive because your house is expensive.

If the bank expects you to pay off that loan in 10, 15, or 30 years, you’re going to be making sizable payments to pay that debt off in time.

Then there’s the cost of maintaining a house like that.

San Francisco isn’t a stranger to earthquakes, so you’re likely going to have to deal with some sort of damage.

Even regular maintenance like roof repairs and appliance replacements can cost a pretty penny.

Add all those to your monthly payments, and you’ll find it very difficult to afford a home in San Francisco.


2. Rent Expenses

Red For Rent Real Estate Sign in Front of Beautiful House.


If you don’t have the money to buy a house in San Francisco, your next best option is to rent an apartment.

Unfortunately, you’ll quickly discover that San Francisco is also expensive due to its rental costs.

The problem is that San Francisco isn’t a sprawling city.

It’s a condensed area that only has so much land available for housing development.

As such, real estate developers cannot build any more apartments.

Since there’s a lot of desire to move to San Francisco, it becomes a situation where only those who have the most money can rent an apartment.

They drive up the price and squeeze out those who don’t make a certain income.

The average cost of rent in San Francisco is $3,397.

For people who live in more affordable cities, that’s basically the monthly mortgage cost of a high-scale home.

Because rent takes up such a large portion of their paychecks, those who live in San Francisco have less money to pay for other things.

They might not be able to put as much away for savings or college.

They might not even be able to take as many vacations outside of the city as they like.

Paying their bills might also be difficult.

Rent becomes even more expensive when you live in areas where a lot of people want to live.

Downtown apartments, for example, have some of the highest rent around.

They’re right where all the action is and ensure that people can walk to work.

San Francisco is expensive because of the cost of the rent.


3. Food Costs

Young woman shopping in the supermarket


Food costs are another reason why San Francisco is expensive.

While groceries aren’t too expensive, especially when it comes to seafood, you’ll find that eating out is quite pricey.

San Francisco is arguably cheaper when it comes to buying groceries and preparing food at home.

That’s because California’s warm temperatures make it ideal for farming.

The produce doesn’t have to travel far to get to the grocery store.

Since it doesn’t travel far, it’s a lot less expensive.

The same goes for seafood.

San Francisco is right on the bay which means they can get a lot of the fish they want to eat right at home.

However, you’ll find that when you want to eat out at a restaurant, it’s a lot more expensive.

You can find a large number of upscale restaurants in San Francisco.

Executive chefs flock there because of the number of wealthy residents in the city.

The chefs know that wealthy residents like to eat fine dining.

Because many restaurants cater to the rich, those who don’t make the same income end up having to pay more than they might like for their meals.

Another reason restaurants are so expensive is their locations.

The land in San Francisco is expensive.

No matter if it’s a business, a home, or a restaurant, they’re going to face high property taxes or high land rent.

If the restaurant owns the land, they have to pay high property taxes.

If the restaurant is renting the building from someone else, they face high rent.

Those high costs then get built into the pricing of the menu.

They need to cover the cost of rent as well as pay for their workers.

If you enjoy eating out, San Francisco may be too expensive for you.


4. Parking Prices

Car parked in asphalt parking lot and empty space parking in nature with trees and mountain background


Owning a car in San Francisco makes the city even more expensive because of the high parking prices.

San Francisco tries to encourage its residents to use public transportation.

It has plenty of different transportation services that its residents can enjoy.

There are buses and trolleys that connect different parts of downtown.

However, if you’re someone who lives on the outskirts of the city, someone who needs to travel often, or just someone who doesn’t like public transport, you may own a car.

If you do, the city is going to become quite expensive for you because you’ll need to pay high parking prices.

The average cost of parking in San Francisco is $20 to $40 for parking garages.

That’s sometimes an hour and sometimes for the day.

One of the reasons San Francisco has such expensive parking is that they don’t have a lot of space for parking.

Since there’s a lot of demand for parking and little supply, you end up paying increased rates.

Monthly payments to park in a garage are even more expensive.

The average monthly price to park in a garage is between $300 and $500.

Some apartments might offer free parking in one of their garages, but you also may need to pay a fee.

If you drive and park often in the downtown area, you’re going to find yourself adding several hundred dollars to your monthly budget for that alone.

You can make living in San Francisco a bit cheaper by using public transport or riding a bike.


5. Car Maintenance

Mechanic, examining the suspension of a vehicle with a steel rod for any undesired clearances as part of a periodical vehicle safety inspection


San Francisco is notorious for having steep hills.

Those hills aren’t great for your car.

While you may not notice the strain it puts on your car immediately, you may discover that your car needs a bit more maintenance than it would in an area with far fewer hills.

Hills increase the need for maintenance because it makes your car work more.

They need to use more gas or power to get up the hill.

Not only does the car need to push its own weight up the hill, but it also has to push the weight of everything inside of it.

If you have a car full of people, that’s a few extra hundred pounds that it needs to carry.

Since the car is under more strain, its parts wear down a bit faster.

High-quality cars will last longer than cheaper cars, but they’re all experiencing the same thing.

The problem with car maintenance is that it can become very expensive.

Since the problem with the car is strain, it means a lot of the damage is going to be on the engine.

Engine repair and replacement costs are extremely expensive.

In some cases, the cost of repairing or replacing the engine is higher than the actual value of the car.

While you likely won’t be spending a lot of money on your car all the time by living in San Francisco, the city is a bit more expensive because of the toll it takes on your car.


6. Big Tech Industry

Exterior view of a Google headquarters building


Perhaps one of the biggest reasons why San Francisco is expensive has to do with its history with the tech industry.

San Francisco is only a few miles from Silicon Valley.

Silicon Valley is where several major tech companies have their headquarters.

While some tech companies have left the Valley or spread out further, there’s no question that it’s still a popular place to get involved with big tech.

Those who work in technology often have large salaries.

Software engineers, developers, and those who own start-ups, for example, tend to have pretty high incomes.

Since not everyone wants to live where they work, the workers in Silicon Valley see San Francisco as an ideal place to live.

It isn’t far from work, and it also has ties to the tech industry.

As such, many workers in tech make San Francisco their home.

They bring their high incomes with them which means they start competing with one another for housing and other expenses.

Since they’re driving up prices between them, it means prices grow far out of reach for minimum wage workers.

They’re no longer able to afford housing or rent because big tech executives have increased the price of everything.

Businesses know that many residents in San Francisco have big wallets.

They raise their prices, too, to get the most out of the residents’ money.

Those who don’t earn the same salary as tech executives find themselves priced out of businesses and services.


7. Hilly Terrain

Lombard Street in San Francisco United State


San Francisco is expensive because of its terrain.

While some parts of the city are flat, a good portion of it is on hilly terrain.

It’s extremely difficult and expensive to build a stable structure on the side of a hill.

San Francisco’s hills are notoriously steep.

While some people may find a creative way to make use of those hills, it largely means that there are parts of the land that are unusable for development.

This puts a hindrance on how much San Francisco can expand.

It simply doesn’t have a lot of space.

The hills and ocean are two big barriers that keep the city from expanding further.

Other counties, cities, and jurisdictions around San Francisco also own the land surrounding the city.

San Francisco cannot expand even further because it doesn’t own the land to do so.

This makes the city expensive because of this central problem.

Land is scarce.

When land is scarce, it drives up the price of everything.

Housing becomes expensive because there isn’t enough room to build new houses or apartments.

People have to wait for people to sell their homes or move out of an apartment.

Since there are usually more people looking to move to San Francisco than people selling, they end up having to wait.

Others end up getting into a bidding war with one another for the few houses that are on sale.

Apartments price their rooms high to ensure only those who make a certain income can afford to apply.

The cost of land also impacts businesses.

Businesses have to pay taxes or rent based on the price of the land.

If they have high rent or taxes, it’s going to cut into their cost of operations.

To cover those costs, they need to charge more for their products or services.

San Francisco is expensive because its land is expensive due to its hilly terrain and other factors.


8. Ocean Views

Golden Gate Bridge in San Francisco at sunset


One of the biggest pulls to the city of San Francisco is its ocean views.

San Francisco rests right on the bay.

People can enjoy sunsets and sunrises on the ocean that are unrivaled in beauty.

People can fish, hit the beach, or enjoy several water activities that only those who live on the ocean or other bodies of water can enjoy.

Since not everyone lives close to a lake or ocean, it’s an experience that few share.

Unfortunately, the ocean views are also a reason why San Francisco is expensive.

For one, the ocean restricts San Francisco from being able to build any further.

Secondly, it drives up the demand for houses, apartments, and businesses that are on the ocean.

Everyone wants to enjoy beautiful ocean views.

Since there’s a lot of demand for that sort of luxury, it comes with a high luxury price.

San Francisco is expensive because of its beautiful ocean views and oceanfront properties.


9. Diverse Population Attracts A Lot Of People

multiracial group of friends walking and having fun together


Living in San Francisco wouldn’t be as expensive if it didn’t attract a lot of people to it.

It does, however, which is another reason why San Francisco is expensive.

San Francisco is an incredibly diverse place that tends to trend towards progressive liberalism.

It embraces and even celebrates minorities.

The city has a sort of laidback atmosphere to it where people usually mind their own business or aren’t afraid to help each other.

A lot of people that move to San Francisco do so because they love the culture there.

This means that there’s a lot of demand for housing and apartments.

Because it has such a cool and positive reputation, many people are attracted to the city.

With more people interested in experiencing San Francisco for themselves, it’s making everything more expensive.


10. High Labor Costs

salary text written on wooden block with stacked coins on grey background


A final reason San Francisco is expensive is because of high labor costs.

The city of San Francisco is aware that it’s expensive.

A way to help make it more affordable is to ensure its employers pay their workers a higher salary.

California, in general, tends to take more progressive steps in ensuring its workers get the pay that they need to afford to live.

The problem with better pay is that it means that businesses take on higher labor costs.

Since their costs are higher, the business has to increase the price of their products or services to make up the difference.

That makes buying things in San Francisco more expensive.



San Francisco is a beautiful city that has great views of the ocean and a diverse culture.

Unfortunately, the terrain of its land and its ocean border makes it difficult for the city to expand.

That drives up the price of just about everything since everyone is competing for access to the same thing.

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