[declan]

Silicon Valley wages would have to increase by something like 3x--or house prices would have to drop by over 50%--to make houses here as affordable as the national average. Neither is likely to happen.

A median house in San Mateo County costs 11.3x median county income. A median house nationally costs only 3.3x median national income. So if you wish to buy a house in this area (and of course many people may prefer to rent), you should avoid moving here unless you can make those numbers work.

The reality for homebuyers is a bit worse than even those numbers indicate. Income taxes in California are very high, and most of the SF and peninsula housing stock is older and smaller than the national average. The median San Mateo County home is 1500 sq. ft; the median national home is closer to 2,500 sq. ft.

Construction, renovation, and maintenance costs are higher as well. Gas taxes are higher than the national average, sales taxes are higher, electricity costs are higher, etc. SF and peninsula municipalities have planning reviews that can add tens of thousands of dollars, plus state requirements (Title 24) and local requirements (no site development without survey, civil engineer, etc.) that add still more. Also geotechnical reviews and more expensive foundations--remember we're in earthquake country, folks.

On the other hand, we have very pleasant weather. :)

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Sources: San Mateo County's median home value is $1.13M[1]. The county's median household income is approx. $100K[2]. A house costs 11.3x income. [1] http://www.zillow.com/san-mateo-ca/home-values/ [2] http://www.mercurynews.com/2014/08/28/can-working-class-fami...

The national median home is $188K[3]. The median national household income is $56.5K[4]. A house costs 3.3x income. [3] http://www.huffingtonpost.com/2014/03/13/median-home-price-2... [4] http://www.census.gov/newsroom/press-releases/2016/cb16-158....

[kqr2]

Unfortunately just increasing people's salary (even 3X) without an accompanying increase in housing supply won't help; that will just exacerbate the situation.

The best solution is to align people's incentives to create more regional housing. The two major classes of people are existing home owners and renters.

Although there is a hodgepodge of solutions, one way to do this would be to phase out Proposition 13 and rent control. Of course this would be really unpopular but should in theory lead to more market efficiency and create incentives for both groups to want more housing.

Existing home owners would want more housing to keep property taxes down. Renters which were previously protected by rent control would also be more vocal about creating new housing. People might actually work together to change zoning laws to increase density and improve transportation solutions.

In the current situation, there are some perverse incentives. For example in SF, if you are in a rent controlled apartment but can actually afford to buy a house, it makes sense to rent the house at market rate while you stay at your rent controlled apartment.

[ktRolster]

one way to do this would be to phase out Proposition 13 and rent control. Of course this would be really unpopular

Yeah, to the point that you should think of a different solution. Prop 13 is the 'electric rail' of California politics.

[iaw]

For the price of an okay family home in an okay neighborhood of Palo Alto you can buy a villa in the South of France...

I'm still not sure how to process that.

[x0x0]

The whole thing really puts the lie to the myth engineers in the valley are well paid. In the land of million dollar entry level homes, even $200k of income (!!!) means you will struggle to own somewhere to live. That barely qualifies you for a $1m loan, and that with a $100k downpayment.

I'm aware you can commute eg an hour plus each way from easy bay and find homes for $700k (a bargain!), but something has gone wildly wrong when supposedly well-paid employees can't afford an entry level home in the city they work in.

[titanomachy]

You could buy an island villa in Greece for next to nothing. No work there, though. Not sure exactly point you're making.

[pkaye]

You do realize one can live an hour drive from Palo Alto and have a place than the 25% of the price in Palo Also? And the commute time is much shorter than from France. It is just that people want to be close as possible to work.