One of the areas in the South Bay region, south of Los Angeles County, where Korean families consistently look for properties is Torrance. The school district is stable, and there are many older homes, leading to ongoing inquiries for actual residence. However, surprisingly few people calculate property taxes and maintenance costs properly before making an offer.

Thanks to Proposition 13, which took effect in California in 1978, the basic property tax rate is fixed at 1% of the purchase price, and with the addition of school bonds and local assessments, the effective tax rate typically ranges from 0.7% to 0.8%. Torrance, which is part of Los Angeles County, does not deviate significantly from this range, so estimating the effective tax rate at around 0.75% allows for a rough calculation.

The median home price in Torrance is currently around $1.15 million. Applying the 0.75% rate, the annual property tax comes out to about $8,600. However, the key point of Prop 13 is that the purchase price at the time of acquisition becomes the basis for taxation, and the increase rate is limited to 2% per year, which means that it is common for the taxes on a newly purchased home to be much higher than those of a neighbor who has owned their home for a long time.

Home insurance premiums have noticeably increased across California in recent years. Major insurance companies have limited new enrollments in areas with high wildfire risks, leading to a rise in rates among the remaining insurers. Torrance, being closer to the coast, is more concerned about earthquake risks than wildfires, so if earthquake insurance is not purchased separately, one can expect general fire insurance to be around $1,800 to $2,400 per year.

Maintenance costs are typically calculated based on 1% to 2% of the home price, which is a common practice in the industry. In areas like Torrance, where a high proportion of homes were built in the 1960s and 1970s, it is realistic to apply the upper end of 1.5% to 2% since the timing for replacing roofs, plumbing, and electrical wiring often overlaps. Based on a $1.15 million home, this means annual maintenance costs could range from $11,500 to as much as $23,000.

When adding the property tax of $8,600 and insurance premiums of around $2,000, the total ownership costs could exceed $20,000 to $30,000 annually. When broken down monthly, this translates to about $1,700 to $2,500, so it is important to check whether you can handle this level of cash flow in addition to the mortgage principal and interest.

California operates a Homeowners' Exemption program, which allows a deduction of $7,000 from the assessed value for the home you reside in. The tax savings itself is not significant, around $70 per year, but it will not be automatically applied unless you submit an application to the county assessor's office, so it is advisable to take care of this after closing.

Compared to nearby Redondo Beach or Manhattan Beach, Torrance has a similar tax rate but a lower median home price, resulting in a lower absolute property tax burden. Conversely, when compared to Long Beach, Torrance may come out slightly higher, so it is good to know that even within the same county, there can be differences in tax burdens depending on the school district and development bonds.

Ultimately, if you are considering buying a home in Torrance, it is much closer to reality to budget based on the total ownership costs, which include property taxes, insurance, and maintenance costs, rather than just the purchase price itself. Before closing, it is recommended to request the most recent property tax bill from the title company or escrow officer to confirm the actual amount.