Only the first sentence is correct.
When you talk about a situation which you would like to be different, you need to use 'wish' + the past tense.
I wish I lived in California.
I wish I had a big car.
I were rich. (note that you use the 'were' form for all persons).
The second sentence is wrong - you don't use 'would' to talk about wishes about yourself. You can use 'could' to talk about something you 'can't' do but would like to, for example 'I wish I could speak English fluently, or 'I wish I could lose some weight' - but not 'would'.