Startup Advice

How Expensive Is Silicon Valley in 2014

Make no mistake about it. Silicon Valley is expensive. Actually, it’s very expensive. But if you’ve ever spend any time in the Valley than you already knew that. For those on the outside, than you can believe that rumors surrounding Silicon Valley’s pricey cost of living are true.


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But, just how expensive is Silicon Valley really? Compared to the rest of the country, the cost of living is 87% higher in the Valley than any other American city.

When it comes to housing, Silicon Valley is also the most expensive in the U.S. In fact, based on a survey conducted by Coldwell Bankers in its “Luxury Market Report 2014,” Woodside, CA is the nation’s top luxury market. Woodside wasn’t the only town located in Silicon Valley to crack the top five. Portola Valley was third, with Hillsborough coming in at number four. So, if you wanted to relocate to Woodside, expect to spend $949,000 on a two bedroom house with one bathroom and a fireplace – this for the record was the cheapest listed house in Woodside.

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Trulia, however, found that the average listing price for homes in Atherton at $9,347,107, which could make it the most expensive city in the country. But what’s a couple of million dollars when you’re living in the same area as the guys who founded Google, Larry Ellison, Mark Zuckerberg, George Lucas and Paul Allen? In case you were wondering, there are 71 billionaires who call the Bay Area home, so of course it’s going to be expensive.

So what if you’re not a billionaire? Let’s say you’re just you’re a teacher or even an engineer, what’s the price range? The median price for a home is $550,000 in the whole bay area.  If you’re looking at San Francisco, it’s around $1.1 Million. And rent?  You’re looking at around $3,000 a month for a two-bedroom apartment, which is 76% more than the national average.  I personally pay $2,700 a month for my one bedroom in Palo Alto.  I had to consider this before I moved my startup to Silicon Valley.

To put it another way, if you have a family of four, you would need $90,000 a year to cover rent, food, transportation and childcare. To be more upfront, Silicon Valley is the 7th least affordable housing market for middle class families, San Francisco captured the top spot.

Of course, the housing situation isn’t the only major cost in the Silicon Valley. Living in California also means that if you make over $46,776 a year, the state is going to hit you with a 9.3% income tax. Speaking of taxes, whenever you go out and do some shopping, just remember that California has the second highest state and local sales tax rates at 9.08%. Even Hawaii has more favorable sales tax rate at 4.35%. If you look at the ten most expensive cities in regard to sales tax, Fremont and San Francisco are included.

As for basic necessities. Silicon Valley is 62% higher than the national average. And gas prices? Both San Jose and San Francisco are included in the ten most expensive cities for gas at over $4 per gallon.

Is any of this that big of concern when you reside in one of the highest paying areas in the country? (Web developers earn $25,000 more than the national average and customer service representatives and lawyers also do well here). Well, it should.

Despite Silicon Valley having a reputation for having a higher median income (it was $60,000 in 1993 compared to the $30,000 elsewhere in the country) it’s still a concern if weighing your options on whether or not to live in Silicon Valley. For example, if you made $92,300 a year in the Valley, you would need $74,800 to live that same exact lifestyle in New York City. That’s not saying that you should relocate or never move to the Valley. It’s just bringing up a comparison to give you a better understanding of how pricey it is to live in Silicon Valley.

If you already reside in the Valley, then you already know how expensive it is for housing, gas, food, etc. And hopefully you’ve been fortunate enough to make enough in your salary that you can enjoy the weather and everything else that Silicon Valley has to offer. However, if you’re looking to move to this area because you think it’s magical and can help make your startup a success, you may want to consider other options if money is tight. While it’s an incredible place to work and play, the Valley is really, really expensive.

About the author

Managing Editor John Rampton is an entrepreneur, full-time computer nerd, and startup expert. President at Adogy. I enjoy helping people and am always online to chat +/@johnrampton

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